Bellway sees first-half revenue up 14% amid strong demand

Housing revenue for the six months to the end of January 2018 is expected to rise to around £1.3bn from £1.1bn in the same period a year ago, on housing completions of 4,741, up from 4,462, with all regions performing well.

Meanwhile, the average selling price has grown by nearly 7.8% to a record £276,000 and Bellway has seen a 7.2% increase in the weekly reservation rate. This has contributed to a strong forward sales position, with the order book up 15.7% to £1.3bn.

The company has 6,276 plots contracted, versus 6,287 plots in the same period a year ago, on sites with attractive rates of return.

Bellway said that while UK's exit from the EU provides a degree of uncertainty across the wider economy, the fundamental parameters supporting the housing market remain strong.

Executive chairman John Watson said: "Bellway is continuing to make a sizeable contribution to the supply of much needed new homes and has delivered a further increase in both volume and average selling price in the six month trading period. Significant investment in land, together with ongoing plans to expand the divisional structure, should lead to a further increase in output and hence result in additional value creation for our shareholders."

Shore Capital analyst Robin Hardy said: "This positive update does not really cause any change on our view that the sector faces stiffening headwinds. Demand is softening and prices are weak, as the Halifax index showed yesterday with a second consecutive monthly fall in the UK average selling price. If house prices do not rise by at least 2.5%, the house builders will see a drop in margins after mid-CY2018 as they will not be able to recover build cost inflation now running close to 4%."