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Barratt Developments struck a cautiously optimistic tone on Wednesday, citing an increase in home sales last month.
The UK’s largest homebuilder reported a “slight rise” in bookings in January, signaling the beginning of a recovery in trading.
“While we saw some early signs of improvement in current trading during January, it will take continued momentum over the next few months to be confident that these difficult trading conditions are easing. We need to see the interim results,” Barratt said in yesterday’s trading update.
Signs of an improvement in the tough housing market have sparked a mini-rally among UK homebuilders, with shares of the biggest homebuilders including Barratt, Persimmon, Belway and Redlaw all up about 2% in morning trading.
The latest Halifax data showed residential land prices fell for the fifth straight month, with a further 0.6% decline from December to January. But smaller monthly price drops, rather than the double-digit price drops some predicted following last September’s ill-fated mini-budget, seem promising news for buyers.
Barratt Chief Executive Officer David Thomas said: [slower rate of house price falls] It goes a long way in terms of consumer confidence, especially for first-time buyers. “
Barratt, which built 8,626 homes in the first half, said it plans to complete 16,500 to 17,000 homes in fiscal 2023.
Begbies Traynor Partner Analyst Julie Palmer said:We have healthy levels of cash on our balance sheet but fell below £1bn in the first half [of the year]Weekly booking rates have also plummeted in recent trading, with futures sales similarly declining. “
