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Bellway reports Brexit risk as Help to Buy feeds 39% of completions – results

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  • 16/10/2018
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Bellway reports Brexit risk as Help to Buy feeds 39% of completions – results
Builder Bellway, responsible for the nine Elms Battersea Power station development, reported over 10,000 homes sold over the period and record earnings per share for the group of 423.4p.

 

 

 

Help to Buy continues to drive sales and earnings at 39% of completions, with more pronounced use in London due to affordability issues. Of those, 67% were first-time buyers.

However, the report identifies Brexit as one of a number of potential risks to delivery of ‘future objectives,’ alongside government housing policy, interest rates and mortgage availability.

The report said: “This risk has increased slightly during the year due to increased uncertainty over Brexit and the impact on the economy.”

The future of the Help to Buy scheme, due to end in 2021, remains unclear with commentators expecting possible restrictions to the scheme from the chancellor in the Budget in less than two weeks on 29 October.

 

Defensive measures

 

The builder reported ‘upward pressure’ on build costs across the industry with a shortage of skilled labour and key materials like timber and bricks, which it will counter with more standardised builds.

The builder has increased the amount of cash held on its balance sheet from £16m in 2017 to £99m to 31 July 2018.

It also launched a range called the Artisan Collection, designed to save costs through standardisation and protect future margin. This is a range of 24 standard group house types with ‘improved internal layouts,’ creating distinctive developments with individual character areas.

The technical and sales teams are developing a new construction specification which will also help the group to rationalise the number of suppliers it uses.

The group said: “Whilst there is a risk to consumer confidence posed by the forthcoming exit from the EU, assuming that market conditions remain robust, Bellway has a solid platform from which to further increase output in the year ahead.”

 

Geographic spread

It said: “The market is strongest for affordably priced homes in desirable locations.  Divisions in differing geographic locations, such as Northern Home Counties, East Midlands and Essex, where the focus is on family product, are performing particularly well and have each completed more than 700 homes.”

Bellway also reports build successes in Manchester, West Scotland and London.

The London Boroughs contributed 1,118 completions during the year, up from 959 last year at an average selling price of £414,872, up from £371,796 last year, a deliberately affordable range, it said.

The Nine Elms site in Battersea is a notable exception with 514 apartments at an anticipated overall average selling price of £668,029.  The site has 132 completions in the year, at an average selling price of £705,567 and is expected to complete construction by late 2019.

Board changes this year include Jason Honeyman, formerly chief operating officer, who was appointed chief executive on 1 August 2018, replacing Ted Ayres.

 

 

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