Barratt Developments became the latest housebuilder to unveil a sunshiney set of results, after it said its completion rate was at its highest in nine years.
In a trading update this morning, Barratt said it had completed 17,395 homes in the year to the end of June, compared with 17,319 last year, with affordable housing making up 20 per cent of those units, up from 17 per cent last year.
Pre-tax profit was expected to hit £765m, up 12 per cent on last year's £682.3m, and ahead of market expectations, while gross profit margin will hit 20 per cent.
Total average selling price increased 5.9 per cent to £275,000, from £259,700 last year, while the average price of private completions rose eight per cent to £313,000.
The company added it had forward sales of £2.1bn, up from £1.8bn this time last year. Meanwhile, net cash balance rose to £720m, from £592m.
The company took the opportunity to reaffirm plans to pay a £175m dividend in November this year and next year, adding it expects to deliver cash returns of £1.4bn in the four-year period to November 2018.
Shares rose 1.5 per cent to 593.5p in early trading.
Why it's interesting
Today's results are indicative of one of the UK economy's great conundrums: why, when house price indices are showing muted growth in the property market, are housebuilders doing so well?
The answer lies in Help to Buy, the scheme introduced by the government in varying forms over the past few years, which gives first-time buyers government cash to get their hands on a new home. Low interest rates, which have led to rock-bottom mortgage rates, are helping considerably.
Meanwhile, low transaction volumes in the housing market as a whole suggest those who already own homes are being put off moving house, meaning first-time buyers are turning toward new builds in their droves.
"The typical Briton is as keen as ever to own their own home, in a country where households are forming quicker than properties are being built," said Laith Khalaf, senior analyst at Hargreaves Lansdown.
"All of that adds up to a heady mix for the housebuilding sector, which is reaping the rewards of a buoyant property market."
But there are, as Khalaf also put it, potential banana skins.
"Brexit is a multi-year process and the housing market may not yet have witnessed the full impact of the decision to leave the EU. Indeed house price growth is slowing, which may be a sign of things to come.
"Meanwhile land price inflation looks to be picking up, with Barratt paying £51,750 per plot of land this year compared to £44,925 last year."
So while the outlook is strong for now, there may be stumbling blocks ahead.
What Barratt said
David Thomas, the company's chief executive, said:
It has been another very strong year for the Group both operationally and financially. We have delivered our highest number of completions for nine years, more than any other housebuilder, and continue to see a positive mortgage environment and strong consumer demand.
In March we were recognised as a five star builder by the Home Builders Federation for the eighth year in a row and we are determined to lead the industry in quality and service as we drive operational improvements through the business.
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