Bellway finds homebuyers more confident

By This Is Money
Updated:

 

Housebuilder Bellway has hailed a 'healthy spring selling season' after achieving increased home sales and prices.

Bellway worker on a site

Healthy: Bellway detects a return towards more normal selling patterns

Its sales rate rose by 9% to 111 units a week in the period from the start of February until the end of May.

And its average selling price was up 4% to £182,000.

Bellway said that the uncertainties affecting consumer confidence during a challenging autumn trading period appeared to have diminished.

'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,' it said.

The company put the improvement down to changes in its product mix, plus a bigger contribution from higher-value units around London where demand is strongest.

But it added that constraints on mortgage supply, particularly to first-time buyers, continued to pose challenges to the housebuilding sector.

Bellway has spent £220m on land and land creditors so far this year and this, together with a rise in work in progress, increased the group's net debt to £57m at May 31.

Its shares rose 29.5p to 726.5p in trading today.

View from the City

'The tone of Bellway's interim management statement is one of relief,' said Anthony Codling of broker Oriel Securities. 'The second quarter is typically a tricky time for housebuilders, but this quarter is far from typical.

'The direction of underlying housing market indicators is positive and we also believe that the housebuilders themselves are starting to sleep better at night and are not as fearful of the weekly sales reports as they once were.'

'The worst does appear to be behind them rather than in front of them.'

He kept a sell recommendation on Bellway, in the belief that greater upside would be seen in Taylor Wimpey and Barratt Developments.

Analysts at broker Panmure Gordon said: 'We view Bellway as a high quality housebuilder. With trading robust at the business, we reiterate our buy recommendation and 761p target price.'

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