"Although the economic backdrop remains uncertain, the gradual reduction in mortgage interest rates throughout the first half has helped to ease affordability constraints"
- Jason Honeyman - Bellway
Housebuilder Bellway has reported an “encouraging” recent performance in its latest trading update, despite half-year figures revealing that profit and revenue were notably down.
Issuing its interim results for the six months to January 31 2024, the housebuilder said it had shown resilience while positioning itself for recovery.
Pre-tax profit in the half year dropped 57% against H1 2023 to £134.2m, with operating profit falling 56% to £139.9m. Total revenue decreased 29.6% to £1,273.1m, mainly due to a lower rate of private reservations the previous year.
Its first-half private reservation rate improved by 15.4% to 105 per week (2023: 91), representing a rate per outlet per week of 0.43 against H1 2023’s 0.38.
Completions were down 28.1% to 4,092 homes in response to the “generally softer market conditions” since summer 2022 and Bellway’s lower order book as of August 1 2023.
The company also cited challenges in the planning system for its expectation of a volume decrease in the current financial year against “last year’s near-record high”. For full-year 2024, it anticipates delivering “around” 7,500 homes against 2023’s 10,945.
Bellway saw a 20.7% improvement in its private reservation rate in the six weeks since February 1 against the equivalent period last year to 163 per week – per outlet per week this was 0.67 compared to 0.56 a year ago.
While noting continuing uncertainty, the firm referenced stabilising mortgage interest rates in its half-year which had eased affordability issues, and a seasonal pick-up in demand.
The firm also said it would “continue to engage positively and co-operate fully” with the Competition and Markets Authority’s investigation under the Competition Act 1998 into eight housebuilders, including Bellway.
Jason Honeyman, Bellway's CEO said: “Bellway has delivered another resilient performance in a period of challenging trading conditions. Although the economic backdrop remains uncertain, the gradual reduction in mortgage interest rates throughout the first half has helped to ease affordability constraints and we have been encouraged by the improvement in reservations since the start of the new calendar year.
“If market conditions remain stable, we are well-placed to build the order book through the second half which will serve as a platform for a return to growth in the financial year 2025.”
