More good news for housebuilders: Full-year results from Barratt Developments look broadly in line with expectations and July’s trading statement. Profits were bang in line with 12% growth to £765.1m on revenues that were up 9.8%.

Gross margin just hit the 20% target, while return on capital employed (ROCE) is looking strong at 29.8%, well ahead of the 25% target.

All this is good news for investors with Barratt able to increase its final dividend by a chunky 39% to 17.1p together with a 17.3p special dividend.  That takes the dividends this year to a princely sum of 41.7p and a dividend yield based on yesterday’s closing price, which was just short of its 12-month high, of 6.6%. Not a bad return and confirmation that, as expected, housebuilders would be among the best FTSE dividend payers this year.

But the cautious outlook is unchanged with Barratt expecting only ‘modest’ growth in housebuilding activity in the 2018 financial year. Despite this, current trading looks solid indeed with forward sales including joint ventures up 13.8%. It’s worth noting that completions in 2017 FY were only 0.4% higher than the year before – 76 more homes in all. Based on these results modest growth looks just fine.

House price growth looks firm and a sliver ahead of the trading statement forecast. Total average selling price on completions increased by 6% to £275.2k, which was a touch more than the 5.9% expected. Private home prices were 8% higher.

On land purchases, Barratt remains pretty cautious overall as it focuses on more disciplined volume growth and protects its 25% ROCE level. Plot purchases dipped by about 25% last year but it expects to pick up the pace again in 2018, targeting 20,000 plots.

Meanwhile Berkeley Group Holdings offered more bullishness despite all the uncertainty in the London market. The script is unchanged – low rates, currency tailwinds offsetting lower demand in the capital and a slump in housing activity that has seen the number of housing starts in London drop 30% from 2015 levels. Berkeley reiterated guidance of £3bn in pre-tax profits for the five years to April 2021.

Housebuilders are enjoying a very accommodative environment – rising demand, undersupply of new homes, ultra-low interest rates and good mortgage availability, and a supportive government policy scheme in Help to Buy.

Barratt said market conditions are good, noting that the availability of attractive mortgage finance and Help to Buy continue to support ‘robust consumer demand’. Berkeley said low rates and the exchange rate only partly offset the impact of Brexit and the changes to stamp duty and mortgage tax deductibility. But we should give them some credit too – by cutting leverage and improving margins they have been able to become more profitable and return more money to shareholders.

Budget airlines on the move

Ryanair shares fell 1% on the open after the airline changed its baggage policy. Gone are the two free cabin bags – you’ll get only one. But check-in bag fees have been cut from €35 to €25 for a 20kg bag. It’s hard enough to keep pace with what you’re allowed to take on different airlines and this hardly helps.

The only important number is €50m – the amount Ryanair says it will cost the airline in lost check-in charges. It hopes to claw this back by encouraging more people to check in bag but investors aren’t buying it. Worries about a turbulent second half and falling average fares have already got the market worried, although traffic growth in August was strong..

EasyJet shares popped 1% before paring gains after a strong rise in passenger volumes. August passenger numbers rose 9.4% while the all-important load factor, a sign of how efficient the company is, was up 1.4 percentage points to 96.3%. Yesterday Ryanair reported a similar 10% rise in traffic and load factor up 1% to 97%.

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