The U.K.’s Housing Rally Has Further to Run, Barratt CEO Says

(Bloomberg) -- One of the U.K.’s largest housebuilders is confident the nation’s pandemic property rally has legs.

Barratt Developments Plc, the nation’s third-largest homebuilder, said Wednesday that demand for new homes was outpacing supply and government measures were helping to drive that. Data earlier showed U.K. house prices surged in August by the most in 16 years largely thanks to that support.

Barratt’s shares rose as much as 7.8% in London to their highest since July, with other homebuilders following suit.

Since the U.K. housing market re-opened in mid-May, the government has implemented a sales tax break, proposed an overhaul of planning approvals and extended a financial assistance program for buyers of new homes. That’s helped make up for business lost during the height of the pandemic.

“We expect good demand in the long term,” David Thomas, Barratt’s chief executive officer, said in an interview. “The government Help to Buy program is providing a very accessible, very affordable way for people to get onto the housing ladder, and the stamp duty holiday through to March is providing some extra stimulus.”

While the housebuilder’s profit before tax slumped 45% in the year through June, it said that sales activity since then had been encouraging. Average net private reservations per week have climbed to 314 compared with a weekly average of 250 for the last financial year.

Still, Barratt warned on Wednesday that the shrinking availability of high loan-to-value mortgages, along with the looming end of support programs, threaten to derail demand. It called on lenders and the government to consider further options to help potential first-time buyers.

©2020 Bloomberg L.P.