The property developer Barratt Homes has announced pre-tax losses of almost £600million, it has reported, after having to write down the value of land that it owns.
Compared to a profit of £192.4million a year before, Barratt has announced a loss of £592.4million in the second half of 2008, blaming mortgage
availability for dampening demand for new properties.
Falling property values and potential buyers' inability to secure a mortgage deal account for the majority of Barratt's losses, causing an impairment charge of £494.9million on the value of its land bank, it said.
In an "intensely difficult" housing market, Barratt said that its average selling prices have dropped to £160,700 over the same period – a fall of almost 10 per cent, and a 27 per cent decrease compared to when the housing market was at its peak in June 2007.
Barratt said that it has managed advance sales of £633million, but has had to offer incentives to bring in the buyers, such as shared equity or part exchange.
Having lost 82 per cent of their value in the last 12 months, Barratt's share prices jumped 6.64 per cent following the news that the losses were not as bad as some had feared.
The house builder already announced 1,200 job cuts last year following site closures and falling property prices, and has now added a further 700 jobs to the list after the announcement of more losses.
However, trading in 2009 has shown slight improvement, Barratt said, which has experienced marginally stronger sales in line with rival house building company Redrow, which yesterday announced huge losses for last year.
"The new calendar year has got off to a reasonable start with a step up in reservation and visitor rates," said Barratt Homes
CEO Mark Clare, on a conference call with journalists, but he added that "while that is comforting, its still too early to predict anything other than there are signs of life out there."
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