British house builders report recovery in sales

MORE signs of life in the British housing market were offered after builders Barratt Developments and Redrow reported higher sales and stable prices.

Barratt said visitor levels were up 11.9% in the second half of its year compared with the previous six months, while weekly private sales reservations raced 18.6% higher year-on-year.

Its smaller rival Redrow also noted a “relatively stable” market over the past six months, with private home sales up by 22% to 600.

Both sounded a note of caution, however, over the ongoing drought in the mortgage market that threatens to hold back a sustained recovery.

“Without doubt this is a major obstacle to the recovery of the housing market and we are of the view that resolving this issue can play a significant role in a recovery of the economy as a whole,” said Redrow.

Both firms warned that mortgage valuations continued to be a major stumbling block in sales.

Barratt had to turn away sales after valuations came in too low amid extreme bank caution over lending.

Mark Clare, chief executive of Barratt, noted instances where valuers working for two lenders have given different valuations for the same property.

Redrow added: “Although there has been some easing of the situation, the most significant concern to the industry remains the chronic shortage of mortgage supply exacerbated by the widespread practice of down valuations by surveyors representing mortgage lenders.”

Despite the pick-up, both firms revealed the impact of last autumn’s financial crisis on the full-year figures.

Barratt said completions for the year to June 30, fell to 13,202 from 18,588 a year earlier, while property prices slumped 14% to see the average house worth £157,000 (€183,000).

Private sales were worst hit, down 19%, however Barratt said the picture had vastly improved, with cancellations in the second half almost halving to 19.9% from 37.4% a year ago.

“During the last six months, the early signs of stability we saw at the start of 2009 in the new housing market have continued, underpinned by limited stock and improved customer sentiment. We have seen higher sales rates, lower cancellations and prices levelling.”

Redrow completed 2,113 new home sales in the year to June 30 – a 46% plunge on the year before. Average selling prices also plummeted 12% to £137,500.

Redrow said its annual results were expected to come in at the lower end of market expectations and is reviewing the value of its land portfolio.

Barratt confirmed it had already started its land value review, but does not expect further material write-downs based on results so far.