Despite promising signs from the property market, the economic climate remains difficult for house builders and two of the biggest UK firms are to sell more shares to boost their financial situation. BBC News has today reported that house builders Barratt Developments and Redrow plan to raise ?720.5 million and ?150 million respectively.
The number of houses being sold fell sharply during the economic downturn. This decline has also meant a fall in shares in house builders.
Barratt revealed a similar drop in their finances ? a pre-tax loss of ?678.9 million between July 2008 and 30 June this year, compared to a ?137.3 million profit over the preceding 12 month period. Earlier this month, Redrow reported an annual loss of ?140.8 million.
Chief executive of Barratt, Mark Clare said: ?This has been an intensely difficult year for the group following the sharp decline in the UK housing market. The board has, therefore, decided it is now an appropriate time to substantially strengthen the company’s balance sheet and reduce its debt levels.?
Mr Clare further stated that the raised monies would also be put towards developing a number of existing house sites and to purchase more land on which to build new homes, if possible.
Recently, house prices have begun to stabilise, although research by Halifax and Nationwide estimated a fall in property prices of up to 20 per cent in some areas.
Barratt and Redrow are not the only house builders to sell shares. So far this year, Taylor Wimpey, Bovis, Berkeley Group and Bellway have done the same. Persimmon is the only major house builder not to do so.
