Housebuilder Barratt Developments will be looked to by the city for any clues on how the property sector has performed after the Brexit vote when it announces its full-year results on Wednesday.
The FTSE 100 firm announced the lion’s share of its full-year performance in July, with annual pre-tax profits set to jump by a fifth to £680m, up from £565.5m last year and in line with expectations.
Revenues are also expected to rise 17% over the period.
The early glance at the housebuilder’s full-year performance means investors will be keen to hear an update on how it has performed since June 23 when Britain voted to leave the European Union.
It comes after investors punished property stocks following the EU referendum result amid fears that the housing market will suffer if the economy takes a downward turn following the Brexit vote.
But the property sector has shown signs of resilience in the months leading up to Britain’s decision to leave the EU.
Charles Church builder Persimmon said in August that demand was holding up following the Brexit vote, as pre-tax profits rose 29% to £352.3m for the first half of the year.
Bovis Homes also shrugged off heightened uncertainty surrounding the referendum result to book a double digit rise in profits.
The FTSE 250 firm said in August that the “underlying market fundamentals” for the UK housing market remained positive, as half-year pre-tax profits stepped up 15% to £61.7m to 30 June, from £53.8m in 2015.
Property stocks have clawed back some lost ground since the EU referendum result, but still remain below their pre-Brexit vote levels and a research note issued by Credit Suisse noted: “Echoing commentary we have heard from other industry players earlier this week and last (Barratt) management state it is ‘too early to draw any conclusions regarding market conditions for the short trading period since the referendum’. However, they go on to note that they remain mindful of the enhanced uncertainty now facing the UK market.”
Shares in Barratt Developments are still 14% lower than its closing price on 23 June, with Taylor Wimpey down 16% and Persimmon falling 13%.
Such has been the pressure on housing stocks that Berkeley Group will be downgraded to the FTSE 250 on 19 September after seeing its stock price plunge as much as 30% following Britain’s vote to leave the EU.
Meanwhile, the latest Nationwide property index has given some encouragement to the property sector after house prices increased by 0.6% month-on-month in August to reach a new record of more than £206,000.
Nationwide said that while buyer demand has softened, the number of new homes coming to market has also been low. This has kept the balance of demand and supply tight, which in turn has supported prices.
