Commercial Property News

Barratt Developments, the UK's biggest housebuilder by volume, today reported that it had swung to a H1 profit of £12.1 million from a loss of £9 million in H1 the previous year, as it followed other housebuilders in raising prices. Sales for the period were up 8.6% on the previous year to £953 million.

"We have continued to improve the performance of the business, despite the wider economic uncertainty," Chief Executive Officer Mark Clare said in the statement. "We have delivered a further substantial increase in profits and recently acquired high margin land is now driving further recovery."

Housebuilders are widening their profit margins by focusing more on houses than flats and developing low-cost land bought since the recession that corrected land prices.

The average price for a Barratt home increased 3.1% to £181,200 during the first half and the operating margin widened to 6.4% from 5% a year ago. Barratt, though, by comparison with Galliford Try which also reported today, is still burdened by a heavy debt burden of £542 million, and poorer margins. It completed 5117 properties in H1 (up from 4796 in H1 2010), of which only 68.6% were houses, which holds the average selling price down.

Barratt, which bought the David Wilson business some time ago still maintains the successful Wilson Bowden commercial property business, this side of the business produced a £2 million H1 profit from foodstore developments.

Shares in Barratt Developments closed last night at 129.7p, valuing the firm at £1.252 billion.