Barratt says Q1 hit by continued economic gloom

Published 17th Nov 2010

Housebuilder Barratt Developments reported a slowdown in reservations in the autumn period, as an uncertain economic environment continues to weigh on consumer sentiment.

Net private reservations per active site stood at 0.45 compared with 0.55 in the same period a year ago, as consumers took longer to commit to buying, due to uncertainty surrounding the government's spending review in October, Barratt said in a statement on Wednesday.

"Whilst the autumn selling season has been weaker than anticipated, our encouraging performance on price is expected to drive margin growth for the year," Chief Executive Mark Clare said.

Britain's fourth-largest housebuilder by market value said the total average selling price on completions rose 9 percent to 180,000 pounds in the period from July 1 to November 14.

Barratt said weak consumer confidence and a restricted mortgage market would drag on recovery, but forecast limited volume growth in the current financial year.

A sharp drop in mortgage availability from banks rebuilding their balance sheets has crimped demand for homes in Britain, with analysts expecting house prices to fall during the remainder of 2010 and into 2011.

The company said it expected net debt at the year-end to stand at around 575 million pounds, as it spent money buying land.

Shares in Barratt, which have underperformed the construction sector since mid-October, were up 1.6 percent by 0832 GMT at 74.4 pence.

Also on Wednesday, insulation and roofing group SIG (SHI.L) said group sales rose 3 percent since the end of June compared with the same period a year ago, due to a slight pick-up in residential construction markets.

SIG said its markets remained exposed to a downturn in consumer confidence, as government austerity measures across Europe kick in, but it expected residential construction to show modest improvement in the first half of 2011.

Source: ' Reuters '

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