Barratt joins list of firms reporting strong post-lockdown demand for homes

Barratt is creating new homes at a number of sites, including in Harrow

Joanna Hodgson2 September 2020

The housing industry enjoyed a bumper August as pent-up demand after lockdown fuelled record house prices, but fears are mounting that the momentum will quickly run out.

A flurry of different reports today, including from Nationwide and Barratt, one of Britain’s biggest housebuilders, pointed to an unusually busy August for the sector which is trying to bounce back from the pandemic.

Mortgage lender Nationwide said UK house prices reached an all-time high in August, at an average of £224,123.

Prices rose 2% in August, following a 1.8% increase in July. This is the highest monthly rise since February 2004, and reverses the losses in May and June.

The market was hurt in March when firms had to close estate agent branches and viewings were off the cards.

But restrictions were eased in May and Chancellor Rishi Sunak has since introduced a stamp duty holiday.

Nationwide’s chief economist Robert Gardner said pent-up demand was feeding through into sales, adding: “Behavioural shifts may also be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown.”

Last month was the busiest August for London house hunters in five years, according to research today from estate agent Hamptons International.

It said the number of applicants registering to buy homes in the capital last month was 12% higher than a year earlier and the busiest August since 2015.

Aneisha Beveridge, head of research at Hamptons International, said: “The easing of lockdown combined with a cut to most stamp duty bills brought a host of new buyers into the market and has extended the usual summer selling season.”

FTSE 100 housebuilder Barratt’s chief executive David Thomas hailed “very strong consumer demand”. He said the suspension of stamp duty on property sales of up to £500,000 until March 2021 had encouraged buyers.

Barratt said the sales performance across all regions in the new financial year to date has been encouraging.

As at August 23, forward sales at Barratt stood at 15,660 homes with a value of £3.7 billion, compared to 13,064 homes at £3 billion a year earlier.

In the year to June it grappled with Covid-19 disruption and its pre-tax profits drop 45.9% to £491.8 million.

Barratt’s chairman John Allan sounded some caution: “There has been a reduction in the high loan-to-value lending that many people require to get onto the housing ladder. This has arisen post Covid-19 and reflects a response to a perceived increase in risk and high levels of demand.”

The current Help to Buy model is also set to be replaced in April 2021 with a two-year scaled back version that could impact buyers.

Allan said: “ It is important that lenders and the Government consider what further options are available to help potential first time buyers who want to purchase their own home.2

Howard Archer, chief economic adviser to the EY Item Club said the current pick-up in activity reported by Nationwide “will prove unsustainable due to challenging fundamentals for consumers”.

Archer said: “Many people have already lost their jobs, despite the supportive Government measures, while others will be concerned that they may still end up losing their job once the furlough scheme ends. Additionally, many incomes have been affected.”