Upbeat Barratt says housing won't crash

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The Independent Online

Barratt Developments, Britain's biggest housebuilder by volume, said yesterday it planned to boost output and was confident the recent slowdown in the housing market would not turn into a crash.

Barratt Developments, Britain's biggest housebuilder by volume, said yesterday it planned to boost output and was confident the recent slowdown in the housing market would not turn into a crash.

The company posted a 27 per cent rise in pre-tax profits to £367.7m for the year to the end of June, beating analysts' forecasts. Turnover was up 16 per cent to £2.5bn and the full-year dividend rose 25 per cent to 21.58p. Barratt has also increased its forward sales book from £880m to £1bn since the end of the financial year, which together with completions to date, secure 55 per cent of its sales target three months into the current year. The company expects to build 14,700 homes this year, rising to 20,000 a year by 2010. It is building about 80 per cent of its houses on brownfield land.

David Pretty, the chief executive, said demand for housing remained strong and was underpinned by low unemployment and historically low interest rates. The industry builds only 170,000 homes a year, well short of the 250,000 the Government says are needed, he said.

Mr Pretty added: "We welcome the moderation in the housing market. House price rises were not sustainable. They were not good for housebuyers and they were not good for housebuilders either. What we are seeing is a soft landing in the market."

He said the Bank of England had done a good job in raising interest rates gradually to 4.75 per cent in an attempt to cool the housing boom. Fresh evidence that the housing market was coming off the boil emerged this week when the Royal Institution of Chartered Surveyors reported that prices fell last month for the first time since June 2003.

The average price of a Barratt home rose last year by 9 per cent to £166,000. Prices will probably rise 3 per cent to 4 per cent next year in line with incomes, Mr Pretty predicted. Barratt shares closed down 10.5p at 590.5p.

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