- Bellway saw weekly private booking rates rise to 0.59 per outlet last month
- Since last summer, mortgage costs in Britain have become more affordable
Bellway has seen “encouraging levels” of consumer inquiries and increased booking volumes in recent months as mortgage rates continue to moderate.
The Newcastle-based housebuilder saw weekly private booking rates rise to 0.59 per property last month, up from 0.45 in January 2023, when the property sector was experiencing significantly higher volatility.
Mortgage borrowing costs began to rise two years ago when the Bank of England began progressively raising the base rate to a maximum of 5.25 per cent.
Positive trend: Bellway has seen “encouraging levels” of consumer inquiries and increased booking volumes in recent months following a drop in mortgage rates.
Mortgage rate rises were exacerbated by former Prime Minister Liz Truss’ controversial mini-Budget in September 2022, which led to a brief collapse in home buying and a huge withdrawal of mortgage deals from the market.
But since last summer, mortgages have become more affordable amid falling inflation and growing hopes that the Bank of England has ended its rate-tightening policy and may soon cut interest rates. .
Bellway said these factors, along with pay rises, had boosted customer demand, with its private booking rate growing 15.4 per cent to 105 a week in the six months to January.
However, the FTSE 250 company still revealed that property turnover fell to “more than £1.25bn”, down from £1.8bn during the equivalent period the previous year.
The number of completed properties also plummeted 28 per cent to 4,092, while average sales prices were around £7,600 lower at £309,300.
At the end of January, the group’s pre-order pipeline stood at 3,970 homes worth just over £1bn, up from £5.108bn and £1.39bn respectively in the previous year.
Despite the weak results, Bellway CEO Jason Honeyman said the company “delivered another resilient performance in a period of challenging trading conditions.”
“While the economic backdrop remains uncertain, the gradual reduction in mortgage interest rates during the first half has eased affordability constraints, and we are encouraged by the seasonal uptick in customer sales opportunities and an improvement in Bookings”.
Bellway said it was “well positioned” to increase its order book during the second half of the financial year provided market conditions remained stable and current booking rates were maintained throughout the spring season.
But bosses acknowledged they were “aware of future risks” to consumer demand and inflationary pressures even though the economic outlook was improving.
The company’s results echo recent trading updates from Crest Nicholson, Redrow and Barratt Developments, who all reported double-digit sales declines due to lower housebuilding volumes.
Mark Crouch, analyst at eToro, said: “With construction costs rising and Help to Buy ending, it looks like headwinds will remain for the UK property market, particularly when it comes to property investments. buy to rent”.
Bellway Stock They were down 0.5 per cent at £27.96 on Friday morning, although they are up about a quarter in the last 12 months.