Newspaper article The Journal (Newcastle, England)

Barratt Feel Pressure despite Profits Boost

Newspaper article The Journal (Newcastle, England)

Barratt Feel Pressure despite Profits Boost

Article excerpt

Byline: Iain Laing

HOUSEBUILDER Barratt Developments has said that the UK housing market is "still challenging", despite reducing its pre-tax losses and nearly trebling its operating profits.

The Newcastle-based firm said its operating profits for the year to the end of June were up to pounds 90.1m from pounds 34.1m in 2009. But it warned a lack of mortgage finance available to wouldbe homeowners continued to threaten the industry.

While the group said conditions in the housing market have steadily improved over the year, it added the number of buyers and sellers was still "extremely low" by historical standards. It nonetheless reduced its pre-tax losses for the year to pounds 162.9m, down from pounds 678.9m in 2009, and said it made a profit of pounds 15.5m in the second half before tax and exceptional items. But it said market conditions forced it to build fewer sites, which would do "little to address the nation's fundamental housing shortage".

Average selling prices increased by 10.9% during the year and by 17.8% in the first half of the year, compared to the same point in 2009. Forward sales had continued to increase, up to pounds 847.1m by September 5. However, chairman Bob Lawson said that the company had focused on increasing its margins on reduced volumes in a bid to drive its growth.

He said: "During the year conditions in the housing market in Britain steadily improved. Nevertheless, by historic standards the market remained difficult and activity levels continued to be extremely low.

"The key restriction on the industry remains the availability of mortgage finance. The lack of availability of suitable higher loan to value products continued to restrict the new-build sector where customer deposits have traditionally been lower.

"With demand continuing to be constrained, the industry responded by opening fewer sites and controlling stock better. …

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