The UK’s largest housebuilder is expected to earn record profits this year that was boosted by a rise in house prices and home completions.
Barratt Developments said this morning that profits before tax for the year are set to be around £835m, rising nine per cent from £765.1m in 2017, as a rise in mortgage lending and the government's Help-to-Buy scheme helped drive the better-than-expected outlook.
Total home completions rose 1.1 per cent to a decade high of 17,579 for the year ending 30 June, while average selling price rose five per cent to £289,000 compared with £275,200 pounds the year before.
The news comes despite a recent announcement from north west-based Barratt that the firm would stop building homes in central London amid price cuts on existing stock.
Equity analyst Anthony Codling said: "There may be uncertainty in the macroeconomy, but it appears that an English person's home is still their castle and as worries over Brexit increase, it seems that faith in bricks and mortar rises even further."
The FTSE 100 firm’s positive projections buck a recent trend of higher costs and lower profit margins among some of the UK’s major housebuilders.
Richard Hunter, head of markets at interactive investor, said: "The problems which Barratt is facing are, for the most part, not of its own making. Mixed economic data, the possibility of rising interest rates, perhaps even as early as next month and falling house prices have weighed heavily on the sector. The ongoing uncertainty around the implications of Brexit on the economy shows no signs of abating as the strategy (and indeed composition) of the government remains unclear."
David Thomas, chief executive, said: "It has been a very good year for the Group both operationally and financially with strong customer demand for our high quality new homes across our business."
Thomas added: "The Group has traded well throughout the year, and delivered a strong financial and operational performance. Market conditions remain supportive, with attractive mortgage financing available and strong consumer demand for our homes across the country."
While Barratt said that it would still target the outer London market, last month Thomas described property in the centre of the capital as "very challenging to sell".