- Bellway expects to return to growth in 2025 if market conditions remain stable
Bellway expects to return to growth in fiscal 2025 if market conditions remain stable, with signs of an upturn in the market after the recent cut in interest rates.
The group said a ‘moderation’ in mortgage rates was easing affordability concerns for buyers in the property market, helping to buffer an expected sharp drop in new home sales in the first half.
Chief executive Jason Honeyman said ‘challenging operating conditions’ had continued to hit the firm’s bottom line.
The mid-cap homebuilder, which constructs everything from one-bedroom apartments to six-bedroom family homes and luxury penthouses, said its revenue fell by 31 per cent to £2.35billion in the year to 31 January, against £3.4billion the previous year.
This beat analyst expectations of £2.27billion.
Looking ahead: Bellway expects to return to growth in fiscal 2025 if market conditions remain stable
Total completions fell to 7,654 homes, down from 10,945 a year ago.
Average selling prices came in at £308,000, against £310,306 in 2023, but slightly ahead of previous guidance.
Bellway shares rose 2.48 per cent or 66.00p to 2,724.00p on Friday, having risen over 24 per cent in the last year.
The housebuilder’s forward order book at July 31 increased to 5,144 homes from 4,411 homes, with a value of £1.41billion, compared with £1.2billion a year earlier.
Honeyman said: ‘While a lower starting forward order book drove a reduction in volume output, customer demand during the year has benefitted from a moderation in mortgage interest rates which has helped to ease affordability constraints and supported an increase in reservations.’
He added: ‘The improving trading backdrop, combined with the strength of our outlet opening programme, has generated healthy growth in the year-end order book. As a result, we are in a strong position to return to growth in financial year 2025, as previously guided.”
‘We are encouraged by the new government’s plans to increase the supply of new homes across the country and welcome its plans to reform the planning system.’
Anthony Codling, managing director of RBC Capital Markets, said: ‘Bellway delivered a positive full-year trading update selling more homes at a slightly higher price than we had expected as falling mortgage rates, easing cost of living pressures and rising wages are encouraging households to buy homes.’
Richard Hunter, head of markets at Interactive Investor, said: ‘The relative stability of mortgage rates has reignited some customer buying interest, and it seems that the pressure on rates amid a healthily competitive arena will be downwards.
‘Despite a cut to the dividend in July, Bellway still yields 4.2 per cent, which is of some attraction to income-seeking investors. The shares have risen by 20 per cent over the last year, as compared to a gain of 8.3 per cent for the wider FTSE 250, with the market consensus of the shares as a cautious buy reflecting the guarded optimism which is beginning to pervade the UK housing sector.’
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
Saxo
Saxo
Get £200 back in trading fees
Trading 212
Trading 212
Free dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.