HOUSEBUILDER Barratt expects mortgage lending will increase this year, helping the housing market’s recovery to continue throughout 2013.
The Newcastle-founded company is preparing to publish a strong set of interim results with profits more than doubling and a significant reduction in its net debt.
The company said its pre-tax profits for the six months to December 31 will come in at around £45m, while group sales will be in line with last year at around £950m.
The London business, which is aiming to reduce its debt to zero by June 2015, brought down its net debt to £332m by the end of 2012 from £542.2m 12 months earlier.
Mark Clare, group chief executive, said: “This has been a good first-half performance. Pre-tax profit has more than doubled, net debt was significantly lower than the prior year, and we have started the second half with a strong private forward order book up by over 35%.
In addition, we have been investing for the future, successfully securing higher margin land both in the South East and across the rest of the country that will drive further profit growth.”
The average selling price of a Barratt home increased by just over 2% to £185,000 and the company said underlying prices were broadly stable, although there were regional variations.
The South East and London remain the stronger part of the market, although Barratt is looking at land-buying opportunities nationwide.
The company said yesterday: “We have been particularly successful within the London market and today announced the acquisition of two new major sites in central London with a gross development value of £400m.
“These projects in Blackfriars Road in Southwark, and Cannon Wharf in Surrey Quays, will provide more than 1,000 new homes for the capital.”
Barratt has benefited from Government support designed to stimulate growth in the industry, such as NewBuy which helps people buy a new-build home. During the period, 7.7% of Barratt’s private reservations were supported by New-build and the group expects this to increase towards 10% to 15% in its second half.
“The group is pleased to have secured a substantial additional allocation as part of the Government’s latest FirstBuy funding round,” said Barratt.
“We are targeting the use of FirstBuy particularly on sites where affordability remains a key issue, with a focus on driving sales on older and impaired developments.”
Around 16.9% of total completions, apart from joint ventures, were backed by shared equity that mainly came from Government schemes.
Barratt is also set to receive around £34m in low-cost development loans in 2013 from the Government’s Get Britain Building Scheme.