Barratt reports 'low levels' of house sales

Barratt Developments reported this morning that volumes of house sales are running at low levels and “we remain cautious as to near term trading prospects”.

Barratt’s interim management statement covers the 19-week period from 1 January to 10 May.

Mark Clare, chief executive, offers four pages of management information… but all without any detail relating to the group’s worrisome level of debt.

On other subjects he waxes lyrical, however, saying: "Since the New Year we have sold over 4,600 homes at acceptable prices. We are on track to deliver volumes and margins in line with our expectations.

“While there are early signs of stability, the housing market remains challenging, and is constrained by a lack of mortgage finance on appropriate terms."

Barratt’s sales outlet number for the latest period averaged 474.

Total sales outlets are expected to average around 500 for the group's financial year.

Visitor levels per site for the 19-week period were down 6% compared with the comparable period in the prior year.

But more promisingly, since 1 January 2009 Barratt has seen visitor levels per site up approximately 17% on the first half of its financial year.

Total net reservations averaged 243 per week over the last 19 weeks with private net reservations averaging 223 per week.

Over the six weeks since 30 March, visitors per site were up 8% and net private reservations were up 59% compared with the depressed level in the same period last year.
 
Cancellation rates have averaged approximately 16% for the period, compared to 26% in the prior year. 

“We have adopted an increasingly cautious approach to the recording of reservations, reflecting our concerns over the availability of mortgage finance,” said Clare. “We expect the cancellations rate to trend upwards in keeping with normal seasonal trends as we approach the June year-end.”

Margins remain “in line with management expectations”.

Barratt’s forward order book currently stands at £780m equating to 5,300 plots - up from a figure of £460m (and 3,500 plots) at 1 January 2009.

Of the current forward order book, £440m (56%) is contracted.

Clare said: “We expect total land spend for the financial year to be around £300m.  We are investing in land, where we are contractually committed to do so, or where there are investment opportunities requiring limited funding in the near term.”

At current sales rates, the Group's landbank equates to approximately 5.3 years' supply.