• Issue 41

  • Oct 2018

The Source

Housebuilder News

Confident beginnings for Barratt

This financial year has seen a solid start for Barratt Developments. In the period July 1st – October 14th, Barratt reported that the group had “traded well” and as of October 14th 2018:-

  • Total forward sales were up 12.4% year-on-year, at a value of £3,146.5 million, equating to 12,903 units, up against the 12,277 units achieved in the same period in 2017
  • 53 new developments were launched in this period and the volume housebuilder stated they were operating from an average of 365 active outlets, down against last year’s 62 and 371 respectively. The statement said: ““We continue to expect outlet numbers to grow for the full year when compared to the prior year.”
  • Net private reservations (per active outlet, per average week) stayed “strong” at 0.72, though marginally down on last year’s 0.74

David Thomas, Barratt’s CEO, added: “The group has started the new financial year in a strong position, with a good sales rate, healthy forward order book and customer demand supported by an attractive lending environment.”

Bellway breaks volume barrier 

Issuing recent results, Bellway has reported that for the first time in the company’s history, they have exceeded the 10,000 homes barrier.

In the financial year to July 31st 2018:-

  • Volume has increased by 6.9%
  • New home completions reach 10,307
  • Pre-tax profit was up 14% to £641.1 million for the year
  • Revenue rose to £2,957.7 million, from £2,558.6 million last year

The statement reads: “The Group has a strong order book with a value of £1,469.5 million at 30th September (1st October 2017 – £1,361.5 million). Whilst there is a risk to consumer confidence posed by the forthcoming exit from the EU, assuming that market conditions remain robust, Bellway has a solid platform from which to further increase output in the year ahead.”

Good fortunes continue at Countryside

In their most recent trading statement, Countryside have reported “strong growth from mixed tenure delivery.”

In the year to September 30th, Countryside Properties has seen:-

  • A 27% rise in total completions, totalling 4,295 homes
  • 1,276 of these were private sale, up 7% against last year
  • Open sales outlets rose 28% to 60, compared to 47 in 2017
  • A further 55 sites under construction, improving upon the 2017 figure of 41 sites
  • A net reservation rate of 0.80, at top of target range (2017: 0.84)
  • Private average selling price of £402,000, a reduction of 7% (due to the impact of regional mix), though however, an underlying sales price growth of 2%
  • Total forward order book up 40% to £900 million (2017: £644 million), with the private forward book totalling £215 million against £242 million in 2017

Meanwhile Countryside’s Housebuilding arm “continued to deliver good growth”. In accordance with the company’s strategy of keeping housing reasonably affordable for local homeowners, private ASP remained level at £512,000. Additionally, they have secured 1,334 plots over 10 sites, meaning their strategic land bank now totals 19,778 plots, compared to the 2017 figure of 19,826 plots.

Similarly, total completions for the Partnerships division rose 38% to 3,019 homes, up against 2,192 homes in 2017. Private ASP dropped by 7% to £318,000, as a result of the change in regional mix though private completions rose 38% to 1,137 homes, with Private Rental Sector (“PRS”) units also up 12% at 809 and affordable homes up 66% to 1,073. Countryside has control of 29,878 Partnerships plots (2017: 19,223 plots), including 4,981 plots from Westleigh (acquired in April this year), which at current volumes, provides about 10 years of future work for the Partnerships division.

Countryside revealed that they expect private for sale housing to account for only 1/3 of the group completions in this next year: “We continue to have excellent visibility of our medium-term growth with ten years’ secured work for Partnerships and our strategically-sourced land bank in Housebuilding. We continue to see strong demand for our homes, particularly from first time buyers and the private rental sector but are seeing a more subdued tone from discretionary purchasers.”

Group Chief Executive, Ian Sutcliffe, added: “We have enjoyed another year of strong growth, underpinned by our strategy of mixed tenure delivery. Both our Partnerships and Housebuilding divisions have performed very well on all financial measures, exceeding all of the medium-term targets we set out ahead of our IPO three years ago.”

Crest Profits Crumble

Crest has announced both a profit warning and a new strategy to tackle the market problems they are facing.

Crest reported that they anticipate pre-tax profit, for the year to October 31st 2018, to be in the region of £170 million to £190 million, a drastic difference to the £207 million figure achieved in the same period last year. The housebuilder attributed this to the London market and claimed that conditions in the south of England for higher priced homes were: “more difficult than previously anticipated, where sales have not picked up during the traditionally stronger early autumn selling season”.

The company added that measures to alleviate falling sales volumes, including pushing bulk sales to private rental investors and registered providers had impacted their margins, which are now expected to be less than the 18% previously expected.

Crest’s new tactics will prioritise shareholder dividends and include maximising land value and their development portfolio, improving operational efficiencies, slowing down build rates, reducing land expenditure and creating a cash reserve.

Executive Chairman, Stephen Stone, said: “The usual autumn pick up in sales volumes has not been evident during September and October, with many customers putting off decisions to buy whilst current political and economic uncertainties persist. Mindful of the current uncertain market environment, our new strategy will focus on shareholder returns by prioritising cash flow and dividends, maximising the value in our portfolio, and improving operational efficiency.”