UK’s Barratt expects 2021 profit above market estimates, robust demand ahead

Barratt Developments (LON:BDEV) Plc on Wednesday forecast 2021 profit to be marginally above the top end of market expectations and said it sees strong demand ahead, even as UK’s housing market shows signs of cooling following a recent price boom.

After a tax break invigorated the housing sector, continual availability of cheap loans and a pandemic-led preference among buyers for larger houses suited to remote working have helped homebuilders forecast higher medium-term returns.

House prices have risen in recent months as customers rushed to buy homes before tax breaks began to taper from June-end. But, data from RICS (Royal Institution of Chartered Surveyors) last week showed fewer homes were put up for sale and demand grew less quickly, ahead of the end of the tax break in September.

“Whilst these are still uncertain times, we enter the new financial year in a strong position and remain focussed on our medium-term targets, including delivering 20,000 homes a year,” Chief Executive Officer David Thomas said in a statement.

Britain’s biggest housebuilder said it expects profit before tax for the year ended June 30 to be slightly above the company-compiled analysts’ estimate range of 761 million pounds to 812 million pounds ($1.05 billion to $1.12 billion). It had reported profit of 491.8 million pounds for fiscal 2020 and 904.3 million pounds in 2019.

The FTSE 100-listed company also said it completed 17,243 homes in the year, compared with 12,604 units a year earlier and 17,856 homes in 2019.

UK’s second-biggest housebuilder Persimmon (LON:PSN) and some mid-sized firms, including Redrow (LON:RDW) and Vistry, recently highlighted confidence about robust housing demand going forward.

($1 = 0.7226 pounds)