5th Jun 2014 07:15
LONDON (Alliance News) - Bellway PLC said Thursday that weekly reservation rates have increased as demand for its new homes remains robust, buoyed by growing consumer confidence and a strong supply of mortgage finance.
In an interim management statement for the period February 1 to May 31, 2014, the housebuilder said its weekly reservation rate rose 11% to 177 per week, up from 160 per week for the comparable period in 2013.
The value of its forward order book of homes due for completion beyond July 31, 2014 has also significantly improved to GBP670 million from GBP380 million last year. The construction company said that this positive position should ensure that Bellway is "well placed to deliver further
volume growth, subject to market conditions remaining unchanged and challenging
construction targets being met."
Bellway said that it has spend GBP400 million on land and land creditors since August 1, 2013, compared to GBP270 million, which provides "an excellent base for future growth."
The company is encouraged for its future trading strength and reduced its net debt to GBP47 million during the period, down from the GBP95 million reported last year.
Bellway said that demand for new homes remains robust, buoyed by growing consumer confidence and a strong supply of mortgage finance. The firm has also benefited from the UK government's Help to Buy scheme; taking 879 reservations using the incentive since February 1, it said.
As noted by other construction companies, Bellway said that demand from within the London boroughs, where it offers an "affordable product in the context of the local market," remains strong and more pronounced than elsewhere in the country. Customers' use of Help to Buy mortgages in and around London accounts for about one third of the rate in other regions, said the company.
"The strong UK housing market and our disciplined approach to land investment provides a significant opportunity for ongoing volume growth. The Group has a substantial balance sheet and operational capacity for further expansion. Land with detailed planning permission is already in place to achieve next year's volume growth aspirations. This strong position, together with a focus on improving return on capital employed, ensures that Bellway remains well placed to deliver further enhancement to shareholder value," said Ted Ayres, Chief Executive.
Looking ahead the company said the continued strength of consumer demand, together with an acceleration of construction programmes, means that it now expects the number of legal completions to increase by around 20% for the year ending July 31, 2014. Also, due to improvements to the average selling prices recorded during the period, the firm expects to achieve an average selling price slightly in excess of GBP210,000 for the current financial year.
"The Group has benefited from modest net pricing gains, largely as a result of a reduction in the use of selling incentives, together with underlying selling price improvements on some new sites brought
to the market, primarily in and around London," said Bellway.
Shares in the housebuilder jumped in early trading Thursday; the company trades 1,25% higher at 1,422 pence per share, the third highest gainer on the FTSE 250.
By Alice Attwood; [email protected]; @AliceAtAlliance
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