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NEWS

Bellway lifts house price outlook after strong spring season

By Aby Jose Koilparambil

(Reuters) – British homebuilder Bellway raised its annual average selling price forecast on Friday and pointed to strong trading in the spring selling season as improved affordability lifted customer confidence.

The upbeat trading update comes as sticky inflation in Britain has clouded the outlook for interest rate cuts, tempering expectation of a swift recovery in the British housing market despite signs of stability at the start of 2024.

British house prices edged down by 0.1% in May from April, data from mortgage lender Halifax showed, representing a stabilisation of the market after a slowdown last year.

The company was more optimistic than its bigger rivals Taylor Wimpey and Persimmon.

“Bellway has delivered a solid trading performance supported by improved affordability and a seasonal uplift through the spring, CEO Jason Honeyman said.

The company, which builds one-bedroom apartments as well as six-bedroom family homes and luxury penthouses, said its weekly private reservation rate rose 6.9% year-on-year to 0.62 units during the Feb. 1 to June 2 period.

Bellway’s forward order book as at June 2 stood at 5,346 homes, compared with 6,172 homes a year earlier.

Peel Hunt analysts said in a note that with better pricing, they expect annual consensus operating profit to increase 2%-3%.

The group forecast its annual overall average selling price at around 305,000 pounds ($389,851), up from the previous guidance of 295,000 pounds, aided mainly by contribution from some high-value private completions in the final quarter.

It had posted an average selling price of 310,306 pounds in the year ended July 31, 2023.

The Newcastle upon Tyne-headquartered homebuilder reiterated its annual home-build target of 7,500 homes and an at least 600 basis points reduction in underlying operating margin from the year ago.

($1 = 0.7824 pounds)

 

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Subhranshu Sahu, Mrigank Dhaniwala and Jane Merriman)

 

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