Bellway has reported a record year of sales as rising house prices offset increasing energy and building costs, and the housebuilder predicted a bumper 2023 despite higher interest rates and the cost of living crisis.
The company reported a 13% increase in revenues to a record £3.5bn and 10.5% growth in completions to a record 11,198 in the financial year to the end of July.
Bellway said it benefited from a higher than expected rise in the average selling price, which rose 2.6% to £314,000.
“Bellway has delivered another strong performance, with volume output and housing revenue reaching record levels against the backdrop of a challenging operating environment and macroeconomic uncertainty,” the chief executive, Jason Honeyman, said.
Despite the growing economic pressures as the Bank of England raised interest rates despite predicting an imminent recession, Bellway forecast another record year. The number of home completions is expected to reach 12,200 – about 12% more than in pre-Covid 2019. The company’s forward orders book stands at 7,223 homes with the value rising 4.5% to £2.1bn – another record – and it said it has already sold nearly 50% of private completions.
During the year the pace of business increased as buyer demand remained strong with the reservation rate increasing by 6.9% to 218 a week, while the cancellation rate remained at a low 13%.
“Confidence among customers is strong,” the company said. “Although interest rates and fuel costs have contributed to the rise in the cost of living, Bellway’s range of modern, well-designed new homes continues to provide an attractive and affordable proposition for our customers.”
The company expects the average selling price to drop slightly to just over £300,000 in the year to the end of July 2023 owing to previously announced changes in its geographical and product mix.
Last week, Halifax reported the first fall in house prices in more than a year, as the country’s largest lender warned of the impact of higher interest rates and the broader cost of living crisis.
Last week, the Bank of England announced its biggest increase in interest rates in 27 years, in an attempt to curb soaring inflation as gas prices drive up UK energy bills this winter.
The rise of 0.5 percentage points takes the UK base rate to 1.75%, a 13-year high. At the same time it said the UK would enter a recession by the end of 2022 that would last more than a year and predicted inflation would rise above 13% – the highest since 1980.
“Record revenue, a record number of homes completed and a growing forward order book, if the rises in the costs of living and mortgage rates are about to cause the housing market to turn, no one has told Bellway,” said Anthony Codling, the chief executive of the property data firm Twindig.
“The challenge for the UK housing market seems to be a shortage of homes for sale rather than a shortage of buyers which is welcome news for those building houses.”