Bellway home completions are down but customer inquiries are up
- Bellway saw its weekly special booking rates rise to 0.59 per outlet last month
- Since last summer, mortgage costs in Britain have become less expensive
Bellway has noted “encouraging levels” of consumer inquiries and rising booking volumes in recent months as mortgage rates continue to moderate.
The Newcastle-based housebuilder saw its weekly private booking rates rise to 0.59 per outlet last month, compared to 0.45 in January 2023, when the property sector was experiencing much greater volatility.
Household borrowing costs began rising two years ago when the Bank of England began gradually raising its base interest rate to a peak of 5.25 per cent.
Positive trend: Bellway noted “encouraging levels” of consumer inquiries and higher booking volumes in recent months following a decline in mortgage rates
Mortgage price rises were exacerbated by former Prime Minister Liz Truss’s controversial mini-budget in September 2022, which caused a brief collapse in house purchases and a huge withdrawal of mortgage deals from the market.
but, Since last summer, mortgages have become more affordable Amid falling inflation and rising hopes that the Bank of England has ended its interest rate tightening policy and could cut interest rates soon.
These factors, coupled with higher wages, have boosted customer demand, with the rate of private bookings growing by 15.4 per cent to 105 per week in the six months to January, Belloway said.
However, the FTSE 250 company still revealed that housing sales fell to “more than £1.25 billion”, compared to £1.8 billion during the same period the previous year.
The number of completed properties also fell by 28 per cent to 4,092, while average selling prices fell by almost £7,600 to £309,300.
At the end of January, the group’s total futures order book stood at 3,970 homes worth just over £1bn, compared with £5,108 and £1.39bn, respectively, the previous year.
Despite the weak results, Bellway chief executive Jason Honeyman said the company had “delivered another resilient performance in a period of difficult trading conditions”.
“Although the economic backdrop remains uncertain, the gradual reduction in mortgage interest rates over the first half has eased affordability constraints, and we are encouraged by the seasonal rise in leads and improved bookings.”
Bellway said it is “well positioned” to strengthen its order book during the second half of the financial year as long as market conditions remain stable and current booking rates are maintained during 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 reflect recent trading updates by Crest Nicholson, Redrow and Barratt Developments, all of which reported a double-digit percentage decline in sales due to lower housebuilding volumes.
Mark Crouch, analyst at eToro, said: “With construction costs rising and Help to Buy coming to an end, it looks like headwinds will remain for the UK property market, especially when it comes to buy-to-let investment.”
Bellway shares It was down 0.5 per cent at £27.96 on Friday morning, despite rising by almost a quarter over the past 12 months.
(tags for translation) Daily Mail