Barratt chief says finance the key to housing market recovery

Published 13th May 2009

Barratt said today in a trading upadte that it was noticing improved sentiment in the market, with visitors and reservation rates up in recent weeks


The chief executive of Barratt Developments today called for the banks increase their lending to help stimulate the depressed housing market.

Although the housebuilder pointed to some signs that the market is improving, it remained cautious about prospects for a sustained recovery.

"The real challenge is about mortgage finance," said Mark Clare, Barratt chief executive. "While we might say the spring selling season is steady and probably in line or slightly better than expectations and sentiment is moving in the right direction, I don't think we have got a sustained recovery until we get mortgage finance available at the right rates.

"If you look at the level of mortgage approvals, they are still at all-time lows. Unless we see those mortgage approval rates increasing, there's a real danger that customers can't complete transactions because they can't get the mortgages they need."

He said it was too early to say whether government efforts to get the banks to resume lending would feed through into the housing market over the next three to six months.

"I don't think we can be confident," he said. "There's been a lot of action by government and a lot of commitment to improve mortgage finance. A number of banks have made specific commitments.

"All we can say at the moment is that very little has come through and benefited consumers."

Barratt said today in a trading update that it was noticing improved sentiment in the market, with visitors and reservation rates up in recent weeks.

The positive update – which saw shares rise 3% in early trade – follows rival group Redrow's decision to resume building at previously mothballed sites.

Barratt has sold more than 4,600 homes since the new year at "acceptable" prices.

Visitor levels at each of the company's sites were down 6% in the 19 weeks to 10 May compared with the same period last year, but up around 17% on the second half of 2008.

Its forward order book currently stands at £778.2m, which comprises 5,253 plots, up from £455.8m and 3,529 plots at the start of the year.

Clare said things were improving more in London and the south east of England, while there was an oversupply of housing in the Midlands.

He also played down the likelihood of following Taylor Wimpey by raising fresh capital.

"Our focus is very much on managing the company against the backdrop of the financing arrangements already in place," he said.

Source: ' Guardian '

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