Sales plunge at Newcastle housebuilder

Dec 4 2008 By Andrew Mernin

NEWCASTLE-BASED housebuilder Bellway has said sales rates were down more than 50% on last year after trading conditions remained "extremely testing".

The firm reported 50 to 60 sales a week, while its order book at the end of November stood at £340m, compared with £677m in 2007. Bellway said sales incentives have been used on ``virtually every private sale", with part exchange the most commonly used tactic.

It also warned that pricing pressures, driven by rival firms and lenders’ lower valuations, meant a further review on the value of its land and work in progress could not be ruled out.

In October, Bellway reported pre-tax profits of £165.7m for the year to July 31, compared to £234.8m a year earlier.

It said : "Since the group reported its annual results, the trading environment has continued to be extremely testing as the market suffers from negative consumer confidence and restricted mortgage finance, despite the Government’s efforts to resolve the financial crisis."

Cancellations are running at historically high levels of 24% and visitor numbers are approximately 50% down compared to last year, the company added.

The group has axed around 35% of its workforce this year to cope with the housing market slowdown. It said cost pressures had eased, while strict controls on work in progress levels had resulted in the number of completed properties in its possession being 15% lower than previously reported.

As a result of the measures, Bellway said it remained on track to reduce borrowings by £100m over the year to July 2009.

"The group remains completely focused on conserving cash and positioning the business to benefit from any positive upturn in the market as and when it occurs."