The boss of Britain’s largest housebuilder Barratt Developments warned yesterday that a shortage of skilled workers could prevent the country from delivering the homes needed to tackle housing crisis as the company reported a doubling of full-year profits.
Mark Clare said the lack of skilled workers – from bricklayers to architects and plasterers – is one of the biggest challenges facing the market if it is deliver the estimated 250,000 homes a year needed to meet demand.
“If we are to hit the kind of numbers that are often used by politicians in terms of where we should be, we need 150,000 more people working in the housebuilding sector at all levels.
“Wage rates are going up very substantially for certain trades which is fine and a large company we can stomach that for a while. But if there is a finite number of bricklayers then there is a finite number houses that can be built and somewhere in the supply chain there will be housebuilders that won’t be able to deliver to the level that they might have hoped,” he said.
His warning came as Barratt posted a pre-tax profit of £390.6m in the year to 30 June, up 103 per cent on the previous year, while revenues jumped by 21.1 per cent to £3.16bn. The group completed 14,838 property sales in the year to 30 June, up 8.6 per cent compared with 13,663 the same time last year. Homes were sold at an average price of £241,600 – 12.9 per cent higher than the same time last year – thanks to an improved mix of properties and house price inflation.
Clare said the significant improvement in the company’s performance was the result of its £3.8bn investment in land over the last five years as well as the recovery in the housing market.
“We effectively secured 40,000 plots over the last two years so we really have taken advantage of a really good land market from a buyers point of view. We are seeing some good benefits coming through from strategic land too, very much generated by improvements in the planning system,” he said.
Barratt said that on the back of its strong results it had decided to return £400m to shareholders over three years, with the first payment of £100m to take place in November 2015.
Commenting on current trading, Clare said the housing market had returned “to more normal seasonal trends” following the “exceptionally high levels of activity” last summer following the launch of Help to Buy. Total forward sales for the group were up 22.3 per cent at £1.5bn on 7 September. Shares rose 2.8 per cent on the back of the £400m payout.
Profile: Mark Clare
Mark Clare has had to manage some of the toughest ever trading conditions in the industry during his eight years at Barratt. But yesterday the housebuilding boss said the group “was back to full health” – or “nearly”, he added cautiously as an afterthought after cheering investors with news of a £400m payout.
Although housing completions are far from the numbers enjoyed at the peak of the market of 22,000 units, Clare said at 14,800 the group was now back at levels enjoyed in 2006, with 5,700 sale completions in its sight for next year.
And while there is much dispute about why Britain is not building enough houses, Clare insists it is doing all it can to help tackle the housing crisis: “Every site we own is in production where it has a valid planning permission. I am sure there are those that would suggest we could be doing more, but I honestly don’t think we could build any faster.
Having nursed the business back to health is Clare tempted to leave? He bats away the question and insists there is still plenty to be done.