Improving trends reported by builder Bellway

Feb 5 2010 by Karen Dent, The Journal

HOUSEBUILDER Bellway added to evidence that the housing market is improving with news that it is selling more homes and has more on order than it did a year ago.

The Newcastle company sold 2,247 homes in the six months to the end of January, a rise of more than 200 on last year, at an average price of £156,000.

And the builder’s order book, which at £390m is worth almost £1m more than last year, is looking much healthier. Bellway has 2,506 homes on order, more than 300 more than in the same period in 2009.

The figures were released in a trading update to shareholders before Bellway publishes its interim financial results next month.

The company said it had made a "significant" reduction in the stock of unsold homes on its books and it was starting to pump money back into buying more land for future building projects.

It has spend £76m on land - mainly in the South - since the start of the financial year and has agreed terms on land worth another £123m. It expects to have 190 sites selling homes by the end of the year compared to 175 during the first six months.

Bellway warned that mortgage providers’ demands for high deposits, especially from first time buyers, meant there was unlikely to be a rush during the forthcoming traditionally busy spring house selling season.

But the builder said: "Nevertheless, the board considers that the group is currently well positioned and is trading profitably with a high level of targeted output already secured and no borrowings.

"This should enable Bellway to take advantage of opportunities as and when they arise."

Bellway slid into the red for the first time in its history last year when it revealed an annual pre-tax loss of £36.6m after being forced to write off land valued at £66.3m.

Without that write-off, it would have made a £29.8m profit for the year to July 31. The group, which axed around half of its 2,400 staff at the height of the credit crunch, put itself on a sound footing by raising £43.7m from shareholders.