9th Jun 2016 06:52
LONDON (Alliance News) - Bellway PLC on Thursday said it expects its housing completions to rise in its full year by at least 10% and its average selling price to grow 10%, with market conditions robust and demand for homes remaining healthy.
The FTSE 250-listed housebuilder said it expects to report at least a 10% rise in housing completions for its year to end-July, from the 7,752 posted a year earlier, following a strong sales performance since the end of its first half.
Average selling price is expected to increase by around 10% from the GBP223,821 posted a year earlier, and the operating margin before exceptional items is expected to approach 22%, in line with previous guidance. A year earlier operating margin before exceptional items was 20.4%.
In the period between February 1 and June 5, Bellway said it has seen an 8.0% increase in the weekly reservation rate to 196 per week, from 182 per week for the same period a year earlier.
This is against a backdrop in which "market conditions are robust and customer demand for new homes remains positive, assisted by good accessibility to affordable mortgage finance," Bellway said.
Demand for affordably priced homes also remains healthy, further supported by the introduction of the London Help to Buy scheme on February 1, enabling customers to purchase a new home with an increased equity share proportion of up to 40%. Bellway said, as such, the usage of the Help to Buy scheme in London has risen to around 14% of reservations, having been 4.0% a year earlier.
"Notwithstanding the uncertainty surrounding the impending EU referendum, the group has not experienced any noticeable effect on trading," Bellway said, adding that customer confidence continues to be strong and the cancellation rate remains low at 11%, from 10% a year earlier.
Bellway said the land market continues to be attractive, and the company has bought 8,600 plots since August 1, compared to the 5,950 plots purchased for the same period a year earlier, and has spent GBP606.0 million on land and land creditors, from GBP500.0 million the prior year.
The group has agreed heads of terms and instructed solicitors on the purchase of a further 6,200 plots, it said.
Bellway has maintained a "substantial order book" with a value of GBP1.29 billion at June 5, compared to the GBP1.27 billion posted in May 31, 2015, representing 5,346 homes, up from 5,502 homes a year earlier.
"Government policy continues to support home ownership and whilst we await the outcome of the consultation relating to the forthcoming Starter Homes Initiative, we are hopeful that this should assist in the continued provision of affordably priced new homes," the company said in a statement.
"Plans are well advanced to open a nineteenth operating division, in the North of England, in the first half of the next financial year and this will further strengthen the group's ability to continue its strategy of disciplined volume growth," Bellway added.
By Hannah Boland; [email protected]; @Hannaheboland
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