UK building firm predicts slowdown in house prices

UK housebuilder Barratt Developments said today it expected house prices to increase “much less rapidly” in the next 12 months as it reported record full-year results.

The Newcastle-based company said the market had moderated in recent months following interest rate rises.

It said it expected house selling prices would rise in line with incomes at around 4% in 2004/5.

Barratt said the slower growth would help affordability and a more stable market would provide a firm foundation for the group’s future growth.

It said demand for new homes continued to be supported by historically low interest rates, good employment levels and housing supply constraints caused by planning delays.

Barratt said all its regional markets, including London and the South East, remained sound and produced improved performances.

Pre-tax profits in the year to June 30 were up 27% at £367.7m (€537m) while the full-year dividend increased 25% to 21.58p.

Chairman Charles Toner said the “excellent all-round performance” resulted in the group’s 12th year of consistent growth.

“Interest rate rises have helped moderate the market, ensuring that it becomes more stable and sufficient for us to achieve our goals.

“We are well positioned to continue our strategy of steady organic growth and look to the future with confidence.”