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Barratt benefits from price rises and increased sales

Housebuilder Barratt Developments, which recently set out plans for 780 new homes across the west of Scotland, said it had seen forward sales rise 71% to nearly £1.3 billion in the first half of its financial year.

The company said it was confident of delivering a strong second half to its financial year.

There has been a slew of strong figures from the housebuilding sector as Government mortgage subsidy schemes kick in.

Barratt chief executive Mark Clare said: "As a result of the continued recovery of the housing market across all regions and our £3.1bn investment in new land over the last four years, we have been able to increase materially the number of new homes being built and our profitability."

Barratt said total forward sales, home purchases that have been reserved with deposits, over the six months to the end of December reached £1.27bn. This compared to £742.1 million for the same period last year.

It is gaining from rising sale prices as well as increased trade with the number of plots sold rising a slightly more muted 68% to 7,007, from 4,258 a year ago.

Panmure Gordon analyst Mark Hughes said: "The company is reporting higher average sales rates across all regions. This puts the company in an exceptionally strong position going into H2 (the second half of its financial year)."

Barratt surprised some observers with the strength of its 19% rise in completions to 6,195.

Barratt has cited improving sales and the impact made on the housing market by the Help to Buy scheme as key factors behind its commitment to build the 780 new homes in the west of Scotland this year. It has 15 projects planned for Scotland in 2014, which will see the group build up to 1400 homes in total.

House prices were up 5.4% in the UK in November, compared with a year earlier, according to Office for National Statistics figures published yesterday. In Scotland they were 2.5% ahead.

Some commentators remain concerned about Government measures to stimulate the housing market.

Jason Hollands, managing director at wealth manager BestInvest said: "House prices have been rising more rapidly than average earnings.

"Worryingly however household debt levels have been rising, highlighting a disconnect between the messaging of policy makers about the virtues of austerity at a Government level and the impact of initiatives designed to encourage spending and boost the property market on personal balance sheets."

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