Barratt Developments, Britain’s biggest housebuilder, defied predictions of a Brexit market freeze on Wednesday, saying sales had risen since the vote to leave the European Union.
Shares in the country’s biggest housebuilders plunged after the referendum result on expectations that the market would be hit by uncertainty, but with a long-term lack of supply of new housing demand has instead grown following the initial shock.
Barratt’s confidence echoed that of smaller rival Redrow which on Tuesday said that sales had climbed 8 percent since June 30, and Persimmon which last month said that reservations of new homes had jumped.
But trading in northern and central England was stronger than in the south of the country around the capital, Barratt noted, reflecting a cautious update from high-end London-focused housebuilder Berkeley on Tuesday.
Overall, Barratt Chief Executive David Thomas said it was business as usual after the firm said that forward sales of houses since June 30 were up 4.1 percent over a year ago.
“It (Brexit) is just no longer a point of discussion (between sales representatives and customers),” he said.
“There’s strong consumer demand, good mortgage lending and that’s allowing us to build and sell plenty of homes.”
RATE CUT IMPACT
Growth in demand for its houses could also benefit from an interest rate cut in Britain on Aug. 4, which Thomas said was still filtering through into banks’ mortgage offers.
“There’s probably not very much of that in our figures so far but clearly it’s got to be positive,” he said.
For its 2016-2017 financial year, Barratt is expecting modest growth in the number of houses it sells, having reported a 21 percent rise in pretax profit to 682.3 million pounds ($915 million) for the twelve months ended June 30 2016.
The company said housing completions in the year ended June 30 were up by 5.3 percent at 17,319, its highest total in eight years.
Barratt had warned in mid-July that as preparation for a possible slowdown in the wake of the Brexit vote, it was reviewing its construction pace and land buying programme, but Thomas said on Wednesday that given current trading there was no change.
“We’ll carry on monitoring things but there’s no change in our plans in terms of build and so on,” he said.
Barratt said that slower sales on more expensive London properties, those worth over 1 million pounds, was a trend which had been ongoing for about a year, before the Brexit vote.
Berkeley last week halted construction at a luxury housing project in southwest London, where homes were expected to sell for up to 5 million pounds, without saying why.
Shares in Barratt, which had lost as much as 40 percent of their value in the weeks after the vote, traded down 2.2 percent at 495.8 pence.
The stock has been recovering since mid-July, heading back towards its pre-vote level of 578 pence from a low of 333 pence.
However, Shore Capital analysts advised caution.
“We still believe that it is dangerous to assume there is absolutely no risk from Brexit and to restore valuations bases,” Shore Capital’s Robin Hardy. ($1 = 0.7453 pounds)