Housebuilders look to raise cash

The prices for new houses have fallen sharply

Two of the UK's largest housebuilders have announced plans to bolster their finances by raising cash through selling more shares.

Barratt Developments wants to raise £720.5m through a rights issue, while Redrow is aiming for £150m.

Barratt also announced a pre-tax loss of £678.9m for the year to 30 June, compared with a profit of £137.3m for the same period a year earlier.

House sales have fallen dramatically during the recession.

As a result, shares in housebuilders have also fallen sharply.

Falling prices

"This has been an intensely difficult year for the group following the sharp decline in the UK housing market," said Barratt's chief executive Mark Clare.

"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 added that the cash from the rights issue would also be used to develop a number of existing sites and to buy land if opportunities arose.

Earlier this month, Redrow reported its worst set of annual results - reporting a loss of £140.8m.

Although house prices have rallied slightly in recent months, they have fallen by up to 20% in some regions, surveys by Nationwide and Halifax have found.

Four housebuilders have already issued shares to raise cash this year.

In May, Taylor Wimpey raised £510m while Bovis, Berkeley Group and Bellway raised between £49m and £60m each.

Persimmon is now the only major housebuilder not to have made such a move.