Bellway to ease focus on London as it eyes other opportunities

MAJOR HOUSEBUILDER Bellway has said it will focus less on London as better opportunities elsewhere in the country push down the capital’s pull.

Bellway – which built a record 10,900 new homes in its most recent financial year, a 5.7 per cent rise – said it has gradually cut back on investment in London and expects the proportion of its homes sold in the capital to reduce in the foreseeable future.

Pre-tax profit rose 3.4 per cent over the year, even as it warned Brexit uncertainty could hit consumer confidence.

The property developer said that revenue grew 8.6 per cent to £3.2bn, while pre-tax profit reached £662.6m.

The company’s operating margin, the amount of profit it makes per pound of revenue after some costs, fell to 21 per cent from 22.1 per cent, the company said. It follows rival builder Taylor Wimpey, which in July said that its margins were declining.

“Bellway has been warning for some time that without the higher rates of house price inflation the housing market has enjoyed, housebuilders’ margins cannot help but go down,” said Robin Hardy, an analyst at Shore Capital.

He added: “Unless house price inflation is able to returns to the 4-5 per cent level (last reported rate was only 0.2 per cent) we cannot help but see all housebuilders being caught in this track.” The company’s dialling back in London comes as areas like Manchester and the East Midlands performed strongly, Bellway said.

It built 1,010 homes in the capital, down from 1,118 in its last financial year.

The results follow a strong week for the home builders on the stock exchange after they were boosted by a seeming breakthrough in Brexit negotiations.

Bellway’s shares hit their highest point since January last year, jumping 10.5 per cent on Thursday alone.

However, the company warned in Tuesday’s results that it is “mindful” that Brexit uncertainty could threaten consumer confidence.

This could lead to fewer homes being sold, and reduce earnings per share.