Two of Britain’s biggest housebuilders on Thursday added the growing sense that conditions in the struggling sector were improving but both Redrow and Barratt Developments bemoaned the ongoing paucity of mortgage finance market.
The news follows a sanguine update from Persimmon earlier in the week.
“The early signs of stability we reported in May have continued,” said Mark Clare, chief executive of Barratt.
“On sales we saw the return of the traditional spring selling season…and since the New Year, our prices have been stable overall. We are now in a position where we’re turning customers away where our pricing expectations are not being met. That’s a very different picture to the one where we saw last autumn.”
Barratt began work on new sites and over the next six months plans to open 70 to 80 such sites, but the group said its overall level of ‘open outlets’ - sites on which it is working – will remain roughly stable as work finishes on other sites.
In the 12 months to the end of June, Barratt completed 13,202 homes, down 29 per cent on the 18,588 completed last year, with average selling prices down 14 per cent from £183,100 to £157,000. Barratt will spend £300m on new land over the next 12 months mostly on land it had already contracted to buy, but said it would not have to writedown any more of its landbank.
Redrow gave a more mixed picture on its performance, forecasting full-year results at the lower end of analysts’ estimates and saying that it was still reviewing the carrying value of its land bank – hinting at the possibility of further writedowns on land.
However, the group said that over the last six months, sales prices and volumes had remained stable, with forward sales at the 30th of June of 1,147 homes, down only 4 per cent from the same period last year. An increasing proportion of these forward sales have been to private customers - and not housing associations or local authority public housing. Private customers now account for 52 per cent of these reservations, compared with only 41 per cent a year ago, when the group was more reliant on social housing.
However, these sales have been achieved by increasing the share of private housing reservations, which now account for 52 per cent of reservations, compared with only 41 per cent a year ago.
Redrow has also restarted work on sites it had mothballed, as the group rolls out a new range of homes, moving away from small flats and back towards traditional family homes.
Shares in Redrow fell 0.7 per cent or 1½p to 211p in early trading, while shares in Barratt rose 1 per cent or 1½p to 156p.
“The one thing you will see today on most of our sites that you wouldn’t have seen six months ago is the build process taking place,” said Steve Morgan, chief executive of Redrow, who joined the company in March.
“This is in a controlled manner, but the business had to cut back on build to effectively destock, but we’re now back on site. We started this process very shortly after I rejoined at the end of March. So the sites start looking like building sites again.
“What you will [also] see is the new product range being phased in. It’s already in for planning in many parts of the country, and that process will continue during the late summer and autumn period. We’re moving away from one- and two- bedroom flats and three storey housing, and moving back into far more traditional family housing.”
In the 12 months to the end of June, Redrow completed 2,113 homes, 46 per cent fewer than 3,925 completed in the same period last year. The average selling price fell 12 per cent from £156,900 to £137,500.
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