Bellway sees return to growth in 2025 if market stabilises

9th Aug 2024 07:01

(Sharecast News) - UK house builder Bellway on Friday said it expected to return to growth in fiscal 2025 if market conditions remain stable, as the recent cut in interest rates and higher wages helped to fuel demand.

The company said total housing completions fell to 7,654 homes in the year to July 31 from 10,945 a year ago - but above its target of 7,500 - at an overall average selling price of around £308,000 compared with £310,306 in 2023, which was also slightly ahead of previous guidance.

Housing revenue came in at £2.35bn, down from £3.4bn and the underlying operating margin is expected to be around 10% against 16.0% last year.

Reflecting the improvement in trading and growth in outlet numbers, the forward order book at July 31 increased to 5,144 homes from 4,411 homes, with a value of £1.41bn compared with £1.2bn a year earlier.

"While a lower starting forward order book drove a reduction in volume output, customer demand during the year has benefited from a moderation in mortgage interest rates which has helped to ease affordability constraints and supported an increase in reservations," said chief executive Jason Honeyman.

"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."

Richard Hunter, the head of markets at the investment platform Interactive Investor, said: "The recent interest cut, improving affordability and the possibility of less planning permission red tape have all recently worked in favour for the sector."

Reporting by Frank Prenesti for Sharecast.com