Barratt is ramping up housebuilding, lifting the number of developments to a six-year high, despite recent evidence that the housing market is cooling.
The company, which rejoined the FTSE 100 index last month, plans to open 90 new housing sites in the next six months where 13,500 homes will be built, taking total projects to around 490. The new sites include the former Terry’s chocolate factory near the racecourse in York, where Barratt is building 391 brick-clad homes alongside some of the old brown-brick chocolate works buildings.
Barratt built nearly 7,000 homes in the last six months, up 12.5% on a year earlier, with demand across all regions remaining robust. Its forward order book is 17% ahead of the year-earlier period.
Mark Clare, the chief executive, said: “The mortgage market couldn’t be better in terms of supply – there are low rates and lots of product out there.”
He was not concerned about the impact of the May election on the housing market, saying it could lead to a temporary slowdown before the market takes off again. “The worst case scenario is that we see a slight softening as we go into the key period. We expect 2016 to be boosted by the new government.”
Citigroup analysts Aynsley Lammin and Ami Galla said: “While macro growth rates are slowing, the interest rates fears continue to abate, and with a strong forward order book and growing site numbers the group should continue to make progress towards meeting its medium term targets.”
Inflation in the UK hit a 14-year low of 0.5% on Tuesday, causing many City economists to push back their expectations of the first rise in interest rates.
Clare said shortages of skilled workers have eased somewhat in the past six months, as bricklayers and other tradesmen, who left the industry during the 2008 slump, return – attracted by higher pay rates. Wages have gone up by 10-15% to return to pre-recession levels. Like rival Persimmon, Barratt is hiring some former military personnel, but only a handful, and is training them as site managers. It also takes on 200 school leavers as apprentices every year and is putting 40 students through a new foundation degree programme in residential construction at Sheffield Hallam university.
The latest construction survey from the Royal Institution of Chartered Surveyors, out last week, said the shortage of bricklayers had reached a record high.
