IN ITS LATEST trading update for 1 July to 10 October 2021, Barratts Developments PLC reports continued strength in customer demand for new homes.
While private reservations per average week are 281, compared to 288 in Barratts’ 2021 financial year which runs to 30 June, the company is investing in more housing developments and plots.
In the three-month period since June, Barratts has approved the purchase of 3,735 plots – far exceeding FY21’s 484 plots across 15 sites – and expects to approve up to 20,000 plots in its financial year.
Land acquisitions are bought at a minimum of 23% gross margin and 25% ROCE.
Meanwhile, the company says that building materials supplies shortages have not caused any significant disruption to its build programme, which is averaging 335 houses a week. Build cost inflation is forecast at between 4% and 5% for the June 2021-2022, well below other elements of the UK construction industry.
David Thomas, Chief Executive said: “The positive start to the new financial year has continued in recent weeks with private reservations remaining strong. This is particularly encouraging given the significant year on year reduction in Help to Buy reservations and the ending of the stamp duty holiday.
“We continue to work closely with our suppliers and sub-contractors and have not experienced any significant disruption to our build programme as a result of the challenging supply chain environment.”
Completions and Reservations
Barratts reports 3,699 home completions, which is 8.3% behind the same period in FY21 when, the company says, completions were boosted after lockdowns.
Similarly, private reservations per active outlet per average week are 0.85, showing a reduction of 2.3% from the 0.87 figure in the prior year period. However, Barratts says that was a particularly active period reflecting pent-up demand and increased Help to Buy reservation activity. In the period since June, 21% of private reservations are using Help to Buy to purchase their houses.
Barratts has launched 27 new housing developments since June (there were 33 in the company’s 2021 12-month financial year) and is operating with an average of 338 sites open, compared to 340 in FY21 and 374 the year before. The company expects to deliver average sales outlet growth of around 3% in the current financial year, acquiring sites for both Barratt and David Wilson Homes brands.
Total forward sales were 15,393 homes up on last year’s 15,135 and 2019’s 12,963 homes, at a value of £3,936.6m. The company is 71% forward sold for private homes, in line with the preceding 12 months rates at an average selling price of £344,300 up from £316,000 in 2019.
Barratts expect to complete and sell between 17,000 and 17,250 homes in FY22 and around 750 home completions from its joint ventures. It is preparing for the introduction of the Future Homes Standard in 2022, building all new house types to be zero carbon from 2030.
The trading update adds that Mike Scott will be the new Chief Financial Officer from 6 December 2021.