After a pause following the EU referendum, the housebuilder has regained confidence in the market.
In a recent trading update, Bellway reported a strong sales performance with a 7% increase in the reservation rate to 176 per week (2015 – 165). Housing completions for the full year to 31 July 2017 are expected to increase by around 5%.
“Whilst remaining mindful of the longer term uncertainty as a result of the vote to leave the EU, the positive autumn trading performance has given the board reassurance to cautiously recommence the Group’s programme of land acquisition, following a brief planned hiatus in the weeks after the referendum,” said Ted Ayres, Chief Executive. “As a result, the Group has contracted to acquire 40 new sites (2015 – 37 sites) and has spent £263 million on land and land creditors (2015 – £235 million).
“The average forecast gross margin on land contracted is ahead of historical industry norms, based on expected costs and selling prices at the time of entering into the land contracts.
The Group retains a cautious approach towards debt and as at 4 December had net bank debt of £168 million (6 December 2015 – £136 million), representing modest gearing of around 8% (6 December 2015 – around 8%).
“Trading performance in the current financial year has been encouraging and the Board now expects that the Group should be able to deliver volume growth of around 5%, assuming customer confidence is maintained and there follows the usual seasonal rise in demand throughout the forthcoming Spring selling season.”
The housebuilder said that the recent reduction in the Bank of England base rate has helped to ensure that buying a new home is still affordable. “The Government’s Help to Buy equity loan scheme, which has been used in 37% of reservations (2015 – 29%), remains an important initiative, assisting creditworthy customers with a 5% deposit to obtain access to cost effective mortgage finance,” the statement said.