Surging housing market lifts expectations at Barratt Developments

Barratt Developments, Britain's biggest housebuilder by volume, said it expected to construct more houses in 2015 than previously forecast amid surging demand and rising house prices.

A week after the general election, the company has upgraded its expectations for the number of homes it will sell this year, because of the continued buoyant housing market, fuelled by strong sales and a supply shortage.

Barratt, which has previously said it would build about 15,700 in the year to end of June 2015, said on Wednesday that it now expected about 16,100 completions over the same period, sending shares its up 3 per cent.

"The strong consumer demand we are seeing for new-build properties is supported by an improved mortgage market, with the range of mortgage products available to our customers increasing and borrowing rates remaining at very competitive levels," said Mark Clare, chief executive, adding that the robust levels of demand had triggered interest on both newer developments and legacy, lower-margin sites.

Total forward sales including joint ventures rose 17.9 per cent to £2.59bn in the 19 weeks to May 10, and the group launched 64 new developments during the period.

"The forward order book is at the highest level ever achieved by the group. We remain committed to helping increase the number of new homes across the UK, with our completions increasing by more than 40 per cent over the past four years," said Mr Clare.

House prices have risen over the past two years, with the government helping to maintain strong sales in recent months by lowering the amount of stamp duty property tax paid on the vast majority of sales. According to building society Nationwide, UK house prices rose 1 per cent in April, the fastest monthly rate since last June, after growth slowed last year.

Jitters around the election had an impact on housebuilder shares, with stock market tremors attributed to Labour's plans to give greater rights over new homes to people who had lived in the area for more than three years. But after the Conservative victory, Barratt shares have risen 10 per cent in the five days following the election outcome. The new Tory government has pledged to build 200,000 starter homes in the next five years in office.

Shares were up 3.45 per cent at 564p during early trading on Wednesday.

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