According to Bellway’s results, which cover the period from 1 February to 4 June, the housebuilder said that customers were “adapting to new higher borrowing costs and affordability has been helped, in part, by ongoing wage rises”.
“While overall mortgage availability has improved in recent months, the repricing of mortgage products, as lenders respond to changes in interest rates, continues to affect shorter‐term availability.
“The recent expiry of Help to Buy in England has led to lower year‐on‐year demand from first-time buyers, and there remains a relative lack of affordably priced higher LTV mortgage products,” it explained.
Bellway said that overall headline pricing had “remained robust” across its regions but it was continuing to use “targeted incentives in some instances to secure reservations”.
Sales demand showed ‘sustained improvement’ in Spring
The firm continued that there had been a “sustained improvement” in sales demand in the Spring compared to the “challenging trading conditions” in Q4 last year.
The overall reservation rate came to 190 per week, which compared to 253 in 2022, and the cancellation rate was pegged at 15 per cent. This is slightly up from 12 per cent in the same period last year.
Bellway said this was driven by a reduction in its forward order book to £1.71bn, which is down from £2.4bn in the same period last year and comprises around 6,172 homes.
“Given the profile of completions in the coming months and prevailing reservation rates, a further decrease in the order book is likely by 31 July 2023 and, as previously guided, volume output is expected to moderate in the next financial year,” it added.
Bellway said that it was on-track to deliver 11,000 homes this year and the average selling price is pegged at £300,000.
The firm added that it had a strong balance sheet of £42m, down from £160m in the same period last year.
However, it said that by the end of the year it expected to grow net cash to around £200m, so it can continue “providing continued resilience and strategic flexibility”.
Jason Honeyman, Bellway’s group chief executive, said: “Bellway has delivered an encouraging trading performance, buoyed by a seasonal uplift through the spring, and the group is on track to deliver full year volume output of around 11,000 homes.
“While customer interest is currently healthy, the board remains mindful that cost of living pressures and the uncertain path of future interest rates could impact housing demand.”
He added: “Notwithstanding this, Bellway’s experienced teams, strong balance sheet and high quality land bank, position the group well to successfully navigate changing market conditions and continue to play an important role in increasing housing supply in the years ahead.”
