Bellway margins knocked by slowing housing market
BELLWAY has warned that the slowing housing market is putting pressure on margins, even as it passed the 10,000 homes sales mark for the first time.
The FTSE 250 housebuilder defied wider gloom in the housing market to sell 10,307 homes in the year to the end of July, up from 9,644 the previous year. This pushed revenues for the year up around 16pc to almost £3bn.
Sales demand also jumped, with a 7pc increase in the reservation rate to 200 homes each week, up from 187 the year before.
But the company cautioned over higher-priced properties, which it said have “at times, experienced slower sales rates and occasionally required a greater use of incentives” to sell. Bellway has limited exposure to the London market where this has been seen most acutely.
The average price of a Bellway home increased by 9.4pc to £284,900, compared with £260,354 a year earlier.
However, it warned that there would be “more moderate” growth in house prices in the year ahead. This had put pressure on its margins, which had dropped to 22pc in the 12-month period, down from record highs of 22.3pc from the previous year.
Shares in the company dipped 1.3pc yesterday to £29.39 after the trading update was announced.
Jason Honeyman, CEO, said he was confident that the company would trade well in the coming year, particularly in the UK’S regional markets.
“Provided market conditions continue to remain attractive, the group has the operational and financial strength to further expand the divisional network,” he said.
The value of the company’s order book has also increased since last year, and was worth £1.3bn at the end of last month.