Barratt Developments is planning to resume dividend payments next month as Britain’s biggest housebuilder continues to benefit from the housing market boom.
The FTSE 100 company said it has agreed sales of 13,588 homes in the six months to the end of December, an increase of 14.3 per cent compared to the same period in 2019.
It hailed an ‘excellent’ performance and said it could bring back dividend payouts in February when it unveils its interim results, although it also noted that the sales rate had ‘normalised’ between the first and the second quarter.
Sales boom: Despite a slowdown in the second quarter,
‘While demand for the homes built by Barratt Developments may have slowed from the pent-up flood seen last summer, it remains at a steady flow rather than a trickle,’ said AJ Bell investment director Russ Mould.
Barratt, like its rivals, has benefited from a stamp duty holiday cut introduced in July, which, along with a release of pent-up demand following the first lockdown, has caused a boom in the property market.
However, with the stamp duty holiday and the Help to Buy scheme for existing home owners set to come to an end on the 1st of April, there have been initial signs of a slowdown.
Halifax, Britain’s biggest mortgage lender, said today that the monthly rate of house price growth slowed to 0.2 per cent in December.
Over the six months, Barratt completed 9,077 homes, up 9.2 per cent compared with the same period in 2019. Selling prices for private homes increased by 2.2 per cent on average to around £319,000.
‘Very strong’ demand seen during the six months means it now has fewer homes available for sale. However, it still raised its sales expectations for the full year, which ends in June.
It expects to complete between 15,250 and 15,750 homes in the 2021 financial year – up from earlier estimates of 14,500 and 15,000 homes.
Barratt said it has around £1billion on its balance sheet – which, according to Mould, will allow it to restart dividend payments and to buy land at a time when prices are depressed.
In fact, Barratt said it has already bought 5,635 plots on 35 new sites since starting to buy land again in August.
‘We are now seeing a greater range of land-buying opportunities come to market and have a good pipeline of offers accepted on additional sites,’ it said.
The company cancelled its interim dividend of 9.8 pence per share last year in the wake of the pandemic.
Barratt shares rose 3.6 per cent to 713.80p in late morning trading on Friday.
Barratt construction sites have remained open during the new lockdown
Chief executive David Thomas said the company, which is allowed to have its construction sites open during the new lockdown, is well positioned to weather the pandemic.
‘Nevertheless, we are mindful of the continued economic uncertainties arising from COVID-19 and the UK’s new trading arrangement with the EU, together with the end of the stamp duty holiday and the changes to Help to Buy,’ Barratt said.
Dan Lane, an analyst at Freetrade, said Barratt had coped well in 2020 – but the real test started now.
‘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,’ he said.
The Help to Buy scheme will only be available for first time buyers from the 1st of April, with the scheme set to be scrapped completely in 2023.