Barratt Developments, Britain’s biggest housebuilder, has upped its forecast for the number of houses it expects to sell this year, buoyed by a surge in post-lockdown demand as buyers seek to complete before the end of the government’s stamp duty holiday and the tightening of the help-to-buy scheme.
Barratt has started the year with fewer available homes to sell after a barnstorming period last summer and autumn following the first national lockdown, when sales boomed by 24% over four months. The company said the rate of sales had since “normalised” but that completions were still up 9.2% year on year at 9,077 in the six months to December.
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Despite having fewer homes available for sale in the first quarter this year, which leaves Barratt more heavily reliant on construction activity, it has raised its completion forecast for its financial year, which ends in June.
“Based on current market conditions and site construction activity, we now expect wholly owned completions to be between 15,250 and 15,750 homes,” said Barratt, which in October had forecast between 14,500 and 15,000 completions.
“We have delivered an excellent first-half performance,” the company said. “During the first half we saw an increased sales rate as strong underlying demand was supplemented by pent-up demand from the initial national lockdown, the introduction of the stamp duty holiday and the March 2021 end of help to buy for existing homeowners.”
Barratt, which intends to resume its shareholder dividend from next month, said its order book is already more than 90% forward sold for this financial year. It has an order book of 13,588 homes, up 14% year on year, valued at £3.2bn, up 19% year on year.
The company said that the average sale price of a private home rose 2.2% in the second half of last year to £319,000. The total average selling price, including affordable homes sold, rose 1.1% to £283,000.
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The housing sector was given a major boost in July when the chancellor, Rishi Sunak, announced the suspension of stamp duty on sales of properties up to £500,000. However, the stamp duty holiday is due to end on 31 March.
From April the help-to-buy scheme – introduced in 2013 to allow people to buy new-build homes with a deposit from as little as 5%, with up to 20% of the property’s sale price covered by a government loan – will be restricted to first-time buyers only. It will be scrapped completely in March 2023.
“Barratt has coped well in 2020; arguably, the real test starts now,” said Dan Lane, a senior analyst at Freetrade. “The end of the first lockdown released a buying frenzy in the UK; that’s not always going to be the case. Once stamp duty springs back and only first-time buyers can use help to buy, suddenly the need to get in quick will fade, too.”