Barratt Developments buoyed by solid housing demand but wary of Brexit uncertainty

Housebuilder Barratt Developments said demand for new homes remained solid, driven by a shortage of homes, good mortgage availability and supportive government policy in the shape of the Help to Buy scheme.

The FTSE 100-listed group, however, added that it was wary of the political uncertainty that could potentially be triggered once Britain formally begins the process of leaving the European Union.

Barratt, whose shares are 16% lower than before the Brexit vote in June, said its number of reservations per week stood at 265, in line with last year's figure, while the sales rate of private reservations per site per average week rose to 0.74 from 0.71 in the corresponding period in 2015.

The number of developments also increased, with the company launching work on 69 new sites in the period between 1 July and 13 November, compared with 51 last year.

"This has been another good trading period for the group," said group chief executive David Thomas.

"Consumer demand is strong supported by good mortgage availability. We are mindful of the potential for economic uncertainty created by theoutcome of the EU referendum. However, market fundamentals are robust."

Forward sales at the end of the period were 4.3% higher year-on-year at a value of £2.65bn, the group added in a trading statement released on Wednesday (16 November). In its latest full financial year report, Barratt pre-tax profits increase over 20% from the year before as it completed 5.3% more homes than in the previous 12 months, while the average selling prices jumped 10.4% to £289,800 last year.

However, the company warned the sales of more expensive properties in London remained challenging and it has taken "pricing actions" to address the issue.

"Further actions to de-risk London delivery include an exchanged build and sale agreement on a bespoke development of 39 apartments for a total value of £47m," the group said.

Last month, the Metropolitan Police arrested Alastair Baird, the company's regional managing director for London, and one other former Barratt London employee, on suspicion of bribery offences.

The arrest came after Barratt referred findings of an internal investigation to the police in April following its own audit relating to possible misconduct in the process for awarding and managing supply contracts in the London region.