Published: 05:37 EDT, 14 January 2014 | Updated: 06:26 EDT, 14 January 2014>
Housebuilder Barratt Developments has revealed that almost a third of its customers turned to the Government's Help to Buy programme to get a mortgage in the second half of 2013.
The firm saw a 17 per cent jump in total home sales to 5,953 in the period, excluding joint ventures with other developers. And some 29 per cent of these transactions involved a buyer using the controversial booster scheme to find a loan.
The Treasury is trying to kickstart the housing market by helping buyers with small deposits to get on the property ladder, but its efforts have prompted criticism that it may be inflating a new price bubble.
Rising market: Barratt said it had invested £3.1billion in new land over the past four years
Labour leader Ed Miliband recently accused Britain's biggest construction firms –Barratt, Berkeley, Persimmon and Taylor Wimpey - of pocketing profits while failing to build enough houses.
Today, Barratt said it had invested £3.1billion in new land over the past four years, allowing it to increase the number of new homes being built as well as its profitability.
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Barratt reported forward sales of nearly £1.3billion in the six months to December 31, a jump of 71 per cent on the same period in 2012.
'The Help to Buy scheme continues to have a positive impact on the demand for new homes, in particular providing support to first time buyers,' said Barratt.
It added that improved market conditions and stronger consumer demand had led to an increase in underlying sales prices.
Further evidence of a more buoyant housing market came from estate agent Countrywide, which delivered an upbeat bulletin to the City today saying profits for 2013 would be at the top end of its expectations.
'The recovery evident in the residential property market in the third quarter continued in the fourth quarter with 2013 reflecting the first significant steps on the road to recovery.' it said.
Countrywide added that based on recent trends it was also confident of delivering on its current profit expectations for 2014.
Barratt shares were down 4.5p at 376.5p in early trading, while Countrywide stock dropped 27.5p to 591.5p.
Income sales watch: Barratt announced it was restarting dividends with a payout of 2.5 pence per share when it issued final results last September. The shares yield 0.66 per cent.
View from the City
'Barratt’s status as a recovery play continues apace, with an update which underlines its ability to capitalise on the resurgence of the UK property market,' said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers
'The slight weakness in the price in early trade may well be allied to some light profit taking, as well as the wider market drop.
'Along with its previous strategy to invest in new land at depressed prices over the last few years, the company is reaping strong rewards. There are notable improvements to sales rates, forward sales, reservations and completions, whilst the continuation of the government’s schemes, aimed at boosting buying interest, is also playing into Barratt’s hands.
'Less positively, the group has only recently returned to paying a dividend, net debt has risen for the period (although this reflects seasonal trends) and, when the government finally pulls the rug on its schemes, there will inevitably be some downward pressure on the housebuilders.
'Even so, Barratts is making hay while the sun shines. The shares have risen strongly over the last year, up 68 per cent as compared to a 27 per cent jump for the wider FTSE 250.'
Stock watch: Barratt shares are still well below the peak hit before the financial crisis
Source : http://www.thisismoney.co.uk/money/markets/article-2539134/Barratts-reveals-29-recent-sales-involve-Help-Buy-customers.html