Barratt cautious on outlook as it cuts losses

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Barratt Developments said concerns about the economy and the lack of mortgage finance meant the market for new housing was still challenging as it reported better-than-expected full-year profits yesterday.

"It's early days in the autumn-selling season but so far private reservation rates are in line with expectations and prices are holding up," said its chief executive, Mark Clare.

House prices fell much faster than expected last month, according to a monthly survey from mortgage lender Nationwide, stoking concerns that Britain could be heading for a double-dip recession. However, the latest figures from rival lender Halifax confounded expectations yesterday by showing a rise in prices in August.

"There's all sorts of challenges ahead and if you're concerned about the risk of a double-dip then Barratt is probably seen at the top of the list for further impairments," said Kate Moy, an analyst at Arbuthnot.

Barratt's finance director, David Thomas, said the group reassessed impairment provision every six months and was comfortable with the balance sheet for now.

The company, which is concentrating on building houses rather than flats, said it would continue to focus on prices rather than volume and would not reinstate dividends, unlike its rivals Bovis and Persimmon.

Mr Clare added that the year had also seen a fall in the proportion of investors buying homes, with sales to these purchasers coming in at 10 per cent over the year compared with 25 per cent previously.

Also on Wednesday, Berkeley, which differs from Barratt in that it primarily develops upmarket apartments in London, said it was attracting strong interest from international buyers looking to invest in the capital.

For the year to the end of June, Barratt reported an operating profit of £90.1m, up from £34.2m one year ago.

Barratt had said in July it would report an operating profit of at least £85m for the year thanks to a strong second-half performance. Its shares fell 4 per cent to 99.85p yesterday.