Dan Coatsworth, head of markets at AJ Bell, said: “After the housebuilding sector was rocked by Vistry’s profit warning last week, there was relief at the resilience of Barratt Redrow’s trading update.
“The number of homes built and sold was ahead of market expectations and it has no balance sheet concerns. This should provide a useful buffer as Barratt seeks to navigate a tricky market backdrop while still rewarding investors for their patience.
“The decision to prioritise buybacks over dividends follows pressure from activist investor Phoenix. Given the depressed valuation this move is understandable, though only paying a nominal dividend for a period may alienate some shareholders.
“Selling prices ticked higher despite all the recent turmoil. While cost inflation looks like it will remain a meaningful headwind, it looks manageable for now.
“Barratt has dialled back land acquisitions although it still expects to sell an increased number of homes in the current financial year.
“With incoming CEO Dean Banks set to take over from incumbent David Thomas in September, the market will be primed for any potential shift in strategy, but Banks is likely to pursue a similarly disciplined approach.”
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