Barratt stays upbeat on house prices

BARRATT Developments, Britain's largest builder, today stuck by its forecast of a rise of up to 4%in house prices in 2005 despite mounting evidence that the market has gone into reverse in the past few months.

After bucking an industry downturn with a 2% increase in national sales in the second half of 2004, Barratt is betting that the London and South-East housing market will remain in positive territory this year. It said: 'Stable prices or modest price rises in the year ahead should increase buyer confidence.'

The company completed sales of 6866 homes in its first half-year to 31 December, with average prices up 2% to £165,000. However, its growth in the last few months has been fuelled by rising sales of cheaper social housing. What used to be 'council sales' more than doubled to 1256 units, more than compensating for an 8% fall to 5610 in sales to private buyers of 5610 homes.

Chief executive David Pretty said the firm was entering 2005 with forward sales at a record £800m, up 6% on a year ago. With completions, it has 80% of its annual sales target in the bag.

With about £150m in cash on the books, Pretty refused to rule out an acquisition of another builder, or making a cash return to shareholders.

'All possibilities are open to us but we are in a strong position for future progress as we have exercised prudence,' he said.