Bellway aims for 8,500 new homes this year after profit slump

Bellway has set a target of building at least 8,500 homes this year, boosted by interest rate cuts and a government drive on housebuilding.

The housebuilder built 7,654 properties in the 12 months to July, down 30 per cent on the previous year due to a smaller initial order book and a tougher trading environment.

Higher mortgage rates and cost of living pressures have heavily impacted demand for new homes in recent years, as has the end of the Help to Buy scheme and former Prime Minister Liz Truss’ controversial “mini budget”.

However, the business environment has improved significantly as borrowing costs have fallen and customer confidence has increased amid rising wages.

Bellway’s weekly private booking rate expanded 13.8 per cent to 124 last year, while its cancellation rate fell from 18 per cent to a more normalized 14 per cent.

Its total revenue still fell by 30.1 per cent to £2.4 billion, while its pre-tax profits plummeted by around £300 million to £183.7 million.

But the company’s pre-order pipeline was much larger, totaling 5,144 homes and over £1.4bn, which has since increased to 5,109 homes and over £1.4bn as at 29 September.

Bellway said it is aiming to build at least 8,500 properties this year if “market conditions remain stable”, with production tilting towards the second half of the period as usual.

Jason Honeyman, chief executive of Bellway, said the group had delivered “another resilient performance despite challenging operating conditions”.

He added: ‘We welcome the new government’s plans to reform the planning system, which over time is expected to unlock land supply and support an increase in new housing across the country.

During the general election campaign, Labor promised to build 1.5 million new properties over five years, partly by developing them on lower quality “grey belt” land and hiring more planning officers.

He also promised to publish a 10-year infrastructure strategy that includes housing as key economic infrastructure.

Only 183,610 new homes were built across the UK in the 12 months to March, a year-on-year fall of 13 per cent, according to recent figures from the Office for National Statistics.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “It’s been tough for housebuilders, but things are improving as mortgage rates fall and buyers have more wiggle room on the affordability scale.”

‘If we add to that commitments of greater political support from the government, the focus is now mainly on the recovery phase.

‘Bellway’s long-term strength is volume, and the land bank is well prepared for increased production; This should keep the name in good standing as the market recovers.

Bellway Stock rose 8.9 per cent to £33.24 on Tuesday morning, making them the biggest gainers on the FTSE 250 index and taking their gains over the past year to around 53 per cent.