Barratt Redrow has shaken off concerns about the budget over the past 17 weeks, enjoying increased completions and an increased orderbook.
Although the group pointed to tough market conditions caused by the UK government’s fiscal policies, Barratt completed 3,665 homes in the period to 26 October, up 7.9% year on year.
There were some signs of weakness, however, with weekly private reservations slipping to 0.57 from 0.59. The group is now operating an average of 402 sales outlets, down from 433 previously.
The forward order book stood at 10,669 homes valued at £3.28bn, marginally ahead of last year’s £3.21bn.
Chief Executive David Thomas said the firm remained “uniquely well positioned” with three strong brands and a high-quality land bank. The group is targeting 22,000 completions annually over the medium term.
The integration of Redrow continues to deliver cost benefits. The firm confirmed cost synergies have reached £80m of a £100m target, up from £69m in June.
“Barratt Redrow continues to build on strong foundations, despite pre-Budget uncertainty weighing on the Autumn market for housebuilders,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“Nerves about potential incoming changes to taxes, both in the property market and wider economy, have led to a slight slowdown in sales rates over the 17 weeks to 26 October. Helping to ease the pressure, robust house prices and a favourable sales mix have seen the order book swell slightly higher to £3.3 billion. The integration of Redrow is continuing at pace, expected to deliver another £45 million of cost-savings this financial year,”
Barratt Redrow maintained its full-year guidance of 17,200 to 17,800 completions, with around 40% expected in the first half. The company is 60% forward sold for the year.
“Achieving this target relies on normal trading patterns over its financial year, as well as the potential impact from the Chancellor’s Budget later this month,” Chiekrie said.
“With speculation swirling that manifesto-breaking tax rises are on the cards, it could weigh on affordability for house buyers and profits for housebuilders, proving particularly unpopular among the masses.”