Extraordinary house prices have provided an excellent safety net for housebuilders over the past two years. For Barratt Developments, a bump in the average sales price of 8 per cent on private homes sold over the 12 months to the end of June means that adjusted pre-tax profits are expected to squeak in ahead of expectations at a record £1.05 billion to £1.06 billion.
House price inflation has masked challenges to profit growth for the big housebuilders and Barratt is no different. Its chief challenge? Rising labour and raw material costs, the pace of which has been startling. Build cost inflation is running at 9 per cent to 10 per cent, almost double the rate recorded over the six months to December last year.
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