Bellway expects 10% jump in full-year completions

FTSE 250 housebuilder Bellway said on Wednesday that housing completions for the year to the end of July are expected to have grown 10% from last year's 8,721, marking another year of significant volume growth and ahead of its original target.

Back in its interim results in March, the company had said the number of homes sold for the full financial year was expected to rise by "at least 5%".

In a trading update for 1 February to 4 June, the company said sales demand was strong, with a 13% rise in the reservation rate to 221 per week. Meanwhile, the total order book at 4 June, 70% of which is contracted, stood at 5,819 homes compared to 5,346 homes the year before, with its forward order book of homes due for completion beyond 31 July at £900m, up from £846m.

Bellway said the housing market remains positive and continues to be supported by low unemployment, good availability of affordable mortgage finance and the continued provision of Help to Buy. Customer demand for new homes remains strong across all regions and has increased throughout Spring, unabated by any uncertainty in the weeks leading up to the general election.

Chief executive Ted Ayres said: "Robust market conditions, together with a clear operational focus, is enabling Bellway to continue increasing its contribution to the supply of much needed new homes. We have made a significant investment in land and work in progress over a number of years and this, together with a strong balance sheet and substantial operational capacity for expansion, should ensure that Bellway is well positioned to deliver further volume growth, this year and beyond. This successful implementation of our disciplined growth strategy is leading to ongoing enhancements in shareholder value.”

Bellway said that while the outcome of the general election has caused a degree of instability with regards to future government policy, all political parties recognise the need for increased housing output.

"The board also remains mindful of the wider uncertainty as negotiations to leave the EU commence, however, the group’s strong forward order book, consistent capital disciplines and strong operational focus should ensure that it is well placed to continue its strategy of disciplined volume growth."

George Salmon, equity analyst at Hargreaves Lansdown, said: "There is something of an arm-wrestle going on within the UK’s housing market at the moment.

"Recent figures from both Nationwide and Halifax show prices falling, while political uncertainty has added to the concerns. However, the housebuilders have released a relentless string of positive updates, and these numbers from Bellway are very encouraging too. Reservation rates are impressive, and its guidance for the future is upbeat to say the least.

"Results like these add weight to the argument that, barring a sudden rise in interest rates, demand for new homes will remain buoyant. After all, the fires of demand are being stoked by supportive government policies and a sharp supply-demand imbalance.”

At 0930 BST, the shares were up 4.4% to 2,976p.