Bellway upbeat as home sales and orders rise
House developer Bellway has posted a better than expected view of its market, describing its spring selling as “healthy”.
Its average home unit sales rate was 111 properties per week in the four months to the end of May, up nine per cent on the same period in 2010.
Average selling prices were up four per cent to £182,000 as it sold more properties on sites close to London, where prices are higher and where it said demand remains strongest.
“The uncertainties that affected consumer confidence during the challenging autumn trading period appear to have diminished and, encouragingly, there has been a return towards a more normal reservation pattern with a healthy spring selling season, despite ongoing concerns remaining in the wider economy,” it said in its interim management statement.
It has also met its target to increase the number of housing units it finished this year by five per cent – and had received 1,600 reservations for the next financial year.
And as develops sites that it bought at knockdown prices in the recession, Bellway said its operating margins would continue to improve.
Bellway also said it had spend £220m securing new land, which had pushed its net debt to £57m, but it expected to reduce its gearing level by the end of the year.
The company warned that mortgage supply, particularly to first-time buyers, remained a constraint on the property sector.
“Nevertheless, with a strong order book, low gearing, and the increasing contribution from sites acquired since the downturn, the board believes that Bellway is well positioned to continue delivering both operating margin and volume growth if market conditions remain unchanged,” it said.
Northland Capital analyst Simon Brown said the sales rate was better than expected while its forward committed sales were ahead of consensus.
“Whilst the market is undoubtedly challenging, the strategy taken from a position of strength, offers further self-help orientated recovery,” he said.