Barratt Developments Confirms Forward Sales up 29%

LONDON -- The shares of Barratt Developments  (LSE: BDEV  ) advanced 1 pence to 322 pence during early London trade this morning after the house builder said its forward sales position had improved 29% to £1.3 billion.

Barratt, which last year sold 12,637 homes at an average price of £180,500, said this morning that it had enjoyed a "strong start" to the second half of its financial year.

The FTSE 250 mid-cap revealed net private reservations had improved by almost 10% since the start of January, with an 18% uplift experienced since the announcement of the government's Help to Buy scheme during March.

Barratt also confirmed the average selling price for its private homes had gained 4% so far during 2013, with a higher rate expected during May and June. In addition, the company declared forward sales of private homes had climbed 29% to £1 billion.

Mark Clare, Barratt's chief executive, said: "Our improved performance is being underpinned by stronger market conditions and the operational changes we have made to every aspect of our business. Help to Buy has seen a strong start and we are investing in land and bringing it through planning to meet increasing consumer demand."

In addition, Clare claimed the present housing market was the "most positive" he had seen for five years. He also expected operating profits to enjoy a "significant year on year improvement".

Prior to today, City experts had forecast Barratt's earnings would surge from 8 pence to almost 14 pence per share -- and fund a 2 pence per share dividend -- during 2013. Such projections place the shares on a P/E of 23 and yield of 0.6%

Of course, whether those ratings, this morning's update and the general outlook for the house builders all combine to make Barratt a buy right now is something only you can decide.

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  • Report this Comment On May 11, 2013, at 4:48 PM, secularinvestor wrote:

    The UK housing market is still at an early stage of recovery, leaving huge headroom for UK house builders to grow sales and margins.

    The UK Government is fully committed to continue to stimulate and support the housing market which acts as an engine to spur economic growth and jobs.

    There is also an underlying significant shortage of housing which is acting as a catalyst to increase demand and prices.

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