Incentives on offer to boost Barratt sales

HOUSEBUILDER Barratt has unveiled a package of measures to encourage buyers in an effort to shore up demand as the property market continues its downward spiral.

HOUSEBUILDER Barratt has unveiled a package of measures to encourage buyers in an effort to shore up demand as the property market continues its downward spiral.

The group, which until last year was based in Newcastle, revealed a 68% slump in annual pre-tax profits to £137.3m in the year to the end of June.

The developer, which has cut more than 1,000 jobs because of the downturn, also wrote off £208.4m from its £3.3bn land bank to reflect the state of the housing market.

The company saw a 16.7% rise in revenue to £3,554.7m from £3,046.1m last year, but like-for-like sales were down 14%.

It aims to attract buyers back by paying stamp duty on houses worth up to £500,000 and protecting people selling their Barratt-bought homes from house price falls of up to 15% for the next three years.

To be eligible for the benefits, buyers must complete their deals before Christmas.

Group chief executive Mark Clare said: "We know from research that our customers want low moving costs, help in selling their existing property and more certainty over the price of their purchase."

Mr Clare, who was in the North East last week to meet staff, said the region was "faring well in a difficult market".

Barratt’s housebuilding in the region is now around the same level as it was a couple of years ago, but Mr Clare said looking forward, it would probably be around 25% lower during 2008-9. It currently has 16 developments under way in the region including its key one at Newcastle Great Park.

Mr Clare said that if market conditions remained static, the group would not be looking for further redundancies.

"We are very focused on making sure we keep our national infrastructure. For us to reduce our infrastructure further, we would have to recognise that recovery in our market is going to take a lot longer," he said.

Barratt’s forward sales fell by almost 51% to £697.6m and the group, which last year paid £2.2bn for rival Wilson Bowden, said no final dividend would be paid to shareholders, leaving them with the 12.23p interim payment.

Mr Clare said: "There is little prospect for any material improvement in trading conditions until mortgage finance and customer confidence return.

"Whilst market conditions during the first two months of the new financial year have been broadly stable, they remain extremely challenging."

The average selling price of a Barratt home rose by 6% to £183,100 because of high London prices, but underlying prices dipped by 5%.

Again, overall property sales looked more positive at 18,588 in the year compared to 17,168 in 2007, but like-for-like sales were down by 14%. The group said net private sales dipped by around 30% in the last four weeks.

Barratt had net debt of £1.65bn at the end of June and has agreed new terms with its bankers, which include £350m of credit to help it survive the market downturn.

Shares rallied early yesterday going up by 3% at one point, but finished 0.3% down at 156.

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