HOUSEBUILDER Bellway brought some welcome cheer to the housing market as it reported a healthy spring selling season as consumer confidence improved.
The UK’s fourth biggest housebuilder said that the market continued to improve and a more normal reservation pattern had returned since the end of last year.
“The uncertainties that affected consumer confidence during the challenging autumn trading period appear to have diminished and, encouragingly, there has been a return towards a more normal reservation pattern with a healthy spring selling season, despite ongoing concerns remaining in the wider economy,” the company said.
The Newcastle-based company posted a 9% increase in its sales rate in the 17 weeks to May 31 to 111 units per week, as the average selling price increased 4% to £182,000. It added it had taken another 1,600 reservations for properties to be completed in 2011-12.
Housebuilders are expecting a difficult 2011 as public spending cuts and weaker consumer confidence test the market.
Bellway said the improvement in average house prices was driven by changes in its product mix and a greater contribution from higher-value units in and around London, where demand is strongest.
The FTSE-250 listed firm said it spent £220m on land and land creditors in the year to date, which saw net debt rise to £57m as at May 31, although the company said it expected this level of debt to reduce by the end of the year.
The company warned constraints to mortgage supply, particularly to first-time buyers, combined with wider economic concerns, posed challenges to the housing market.
But it added that with a strong order book and the increasing contribution from sites acquired since the downturn, it was well positioned to deliver growth.
Bellway said continued changes in product mix and higher value units from divisions in and around London drove its better performance.
The 64-year-old business, which employs around 1,400 people nationwide, reported pre-tax profits of £24m in the half year to January 31, up from £19m a year earlier.
Mark Hughes, analyst at brokers Panmure Gordon, said: “Bellway has released a positive statement, confirming that the positive trading seen in early spring has continued in the weeks since.”
On Wednesday, the Government announced plans to sell off public land to developers and housebuilders, worth an estimated £10bn, to help tackle a growing housing shortage. The move could create up to 100,000 homes and 25,000 jobs during the next four years.
