Philip Barnes – Blog


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BREXIT JITTERS??

If there is one thing for sure with Brexit – it’s way too early to predict its longer-term impact with any certainty.

So every article and TV programme confirming precisely what will happen to house prices and housing delivery over the next two or three years must be viewed with a significant pinch of salt.

Why such lack of clarity? Because a house purchase is the biggest investment anyone can make and nobody will make it unless they are feeling confident and secure. It’s about customer sentiment – something which will vary from region to region, from town to town and from family to family. For most people (especially the 52%) sentiment is currently good, as reflected in housebuilder trading.

At Barratt we believe the market fundamentals are strong and we want to increase our housing output. There is much positive news recently. Indeed our own measurements of (a) footfall into showhomes, (b) plot reservations and (c) completed sales are positive compared to last year.

So what are we doing? In simple terms its “business as usual”. We remain committed to or strategy of controlled volume growth which has seen us increase output by over 50% in the last five years and by over 15% in the last two. Over the next few years we will work harder than ever to maximise sales rates and delivery on the sites we have. Customer sentiment is strong  and we have a good supply of consents to draw down as quickly as we can.

In terms of land and planning we spent over £1bn last year. Our aim is to buy at least as much land this year and next. After all land is our lifeblood and if we wish to grow we need more of our raw material. But we won’t simply ignore the cautious economic forecasts for the post-Brexit period. We will continue to be disciplined as we know from previous experience in 2008 that shareholders will have no sympathy if we have to try and justify over-paying for sites which require us to sell homes through the economic cycle.

So when you read about ‘housebuilder jitters’ remember that Barratt is committed to growing volume and our discipline will remain. We will continue to buy land, build homes and sell them to support our strategy of controlled growth.  We will need landowners and planners to be similarly positive and proactive.


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EVER SEEN A HOUSE GET ON A TRAIN?

Or go to the Doctors? Or drive down a congested road? Me neither.

But returning from the party conferences over the last two weeks I was left with a sense that many people seem to think that new homes, in themselves, create infrastructure demands rather than the population growth they are there to serve.

Those of us who work in housing delivery know that housebuilders are only allowed to build an amount of houses equating to the projected local population growth which will be happening anyway. We pray to the God of OAN.

Building homes doesn’t create population growth but in a civilised society new homes are needed to accommodate said projected population growth. It is the population growth which creates the infrastructure pressures not the act of laying some mortar on top of a brick.

When children ask, “Mummy how are babies made?” no parent has ever answered, “well darling, firstly someone builds a house”.

Moving on from the slight facetiousness three important points are raised.

  1. Clearly new housing can influence patterns of migration and, whilst the vast majority of our customers come from within 5 miles of the site, Barratt recognises the need to better align new infrastructure provision and new homes provision.
  2. CIL is the current approach to linking infrastructure investment to housing investment. It is a gigantic mess. There is a review underway. Will it ever be published? Will it ever be acted upon? It is certainly needed.
  3. We housebuilders need to raise our game on this point. Doctors’ surgeries, train carriageways and local roads are going to get busier due to population growth which is going to happen anyhow. Building new homes is often the only way to secure improved or new infrastructure and facilities.

New homes should be regarded as the potential solution to local infrastructure issues, and definitely not the cause.  Yet this week has reminded me we are not getting this message across.

Mea culpa and note to self.