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Barratt Shrugs Off Housing Gloom

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Barratt shrugs off housing gloom

Housebuilder fresh from Wilson Bowden takeover cautious about future but already has £1.4bn sales booked

Fears of a sharp downturn in the housing market eased today as homes builder Barratt Developments insisted there was still "good momentum" in demand for its properties.

Britain's number-two housebuilder behind Taylor Wimpey said forward sales reservations were holding up well, even over the past three months when signs have begun to appear that customer confidence is becoming increasingly strained.

The new owner of Wilson Bowden, where completed sales have surged almost a fifth since January, said it did not share the recent woes that have descended on rivals such as Bovis.

Mark Clare, the chief executive, said he expected the housing market would be "tougher" but shied away from predictions of a slump.

"There is clearly a lot of speculation about the future. We start with a forward sales position that is very strong. Going forward it would prudent to assume that the market will tighten as rate rises bite," he sad.

"We are assuming the market will be tougher but we are confident we are positioned to compete effectively." - things are getting harder?!

Barratt said it was on track to deliver the planned £45 million of cost savings following its £2.2 billion acquisition of Wilson Bowden, completed in May.

It said after "really being able to get inside" the business over the past two months, it had identified opportunities for further cost cuts and would update the market in September at its full-year results. - cost cutting?!

Mark Pain, the finance director, said strong recent trading by the FTSE 100 builder meant it was on course to deliver pre-tax profits for the full-year of just over £400 million.

Chris Millington at Bridgewell said Barratt's update "reads well". He said: "In our view this is a solid performance and not reflected in the group’s rating."

Barratt shares which have been falling steadily for the past few months edged up 9p to 973.5p in early trading against a falling FTSE 100.

Barratt's confident update came after Bovis sent a shiver through the market on Monday, as it cautioned that visits to its sites had stalled and selling prices for new homes had stagnated. Its shares fell 8 per cent.

Barratt's group forward sales for the year were 15 per cent higher than last year at just over £1.4 billion. Some £404 million of that came from David Wilson Homes, part of the Wilson Bowden group.

Wilson Bowden completed the sales of 2,635 properties in the six months to the end of June, a 19 per cent surge on last year, and at an average selling price up 1.7 per cent at £209,400.

Its core Barratt Homes business increased completed sales over the full year by 6 per cent to 15,517 homes. For the past six months, sales were even stronger, up 9 per cent at 8,3111.

Growth in its average selling price had been "constrained" by market conditions, Barratt said, but prices were still up by 2.3 per cent on last year at £169,700.

Source: http://business.timesonline.co.uk/tol/busi...icle2057927.ece

Edited by studdymx

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