Barratt stock price
Barratt shares rose 1.05% on Monday as the housebuilder regained momentum in late July. Despite falling in June, Barratt’s share price has performed well over the past 12 months thanks to solid fundamentals and a buoyant housing market. With the stamp duty holiday coming to an end and many expecting the housing boom to subside, now is an ideal time to analyze stocks.
Rising house prices
Government policies aimed at increasing demand for housing supported the recovery of the housing sector after the pandemic. UK house prices rose 13% in June compared to the same month in 2020.
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As you can see from the graph above, Barratt’s share price has benefited, and the average sale price of its properties has skyrocketed.
Barratt completed 17,243 homes in the year to June, which was slightly below the figure for the same period in 2019, before the pandemic.
However, in July, the market cooled down slightly, although house prices were still 10.5% higher than the same period last year. This may give some investors pause when considering betting on Barratt’s stock over the long term.
outlook
Barratt has some fundamentally good qualities as a stock. Firstly, we have a strong pipeline of sales of over 14,000 homes worth £3.5bn in the year to June 2022. Additionally, the FTSE 100 housebuilder has net cash of over £1.3bn. This gives investors a level of stability and predictability that airline stock buyers could only dream of.
Martin Beck, senior economic advisor at EY Item Club, told the Financial Times: “It seems unlikely that house prices will see a significant correction anytime soon.”
However, Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, disputed Beck’s point, saying: “House price growth has probably peaked now. A sharper-than-expected slowdown will probably occur between now and the end of the year. This would mark the beginning of a sustained slowdown in house price growth.
While the level of housing demand and current price levels are debatable, Barratt will still have a lot of work to do. This, along with the company’s strong fundamentals, bodes well for Barratt’s stock price.
