Bellway home completions plummet but customer enquiries improve

Bellway has noted ‘encouraging levels’ of consumer enquiries and higher booking volumes in recent months as mortgage rates continue to moderate. 

The Newcastle-based housebuilder saw weekly private reservation rates rise to 0.59 per outlet last month, compared to 0.45 in January 2023, when the property sector was experiencing significantly more volatility.

Home borrowing costs began rising two years ago when the Bank of England began progressively hiking the base rate to a peak of 5.25 per cent.

Positive trend: Bellway has noted ‘encouraging levels’ of consumer enquiries and higher booking volumes in recent months following a drop in mortgage rates 

Mortgage rate rises were exacerbated by former Prime Minister Liz Truss’s controversial mini-budget in September 2022, which caused a brief collapse in housing purchases and a huge withdrawal of mortgage deals from the market.

But, since last summer, mortgages have become more affordable amid falling inflation and growing hopes the BoE has ended its rate-tightening policy and could soon cut interest rates.

Bellway said these factors, along with wage hikes, had bolstered customer demand, with its private reservation rate growing by 15.4 per cent to 105 per week in the six months ending January.

However, the FTSE 250 company still revealed that housing turnover slumped to ‘over £1.25billion,’ against £1.8billion during the equivalent period the previous year.

The number of property completions also plummeted by 28 per cent to 4,092, whilst average selling prices were around £7,600 lower at £309,300.

At the end of January, the group’s forward order book totalled 3,970 homes with a value of just over £1billion, compared to 5,108 and £1.39billion, respectively, in the prior year.

Despite the subdued results, Bellway’s chief executive, Jason Honeyman, said the firm ‘delivered another resilient performance in a period of challenging trading conditions.’

‘While the economic backdrop remains uncertain, the gradual reduction in mortgage interest rates through the first half has eased affordability constraints, and we are encouraged by the seasonal pick-up in customer leads and an improvement in reservations.’

Bellway said it was ‘well-placed’ to boost its order book during the second half of the financial year as long as market conditions remained steady and current reservation rates were upheld across the spring season.

But bosses acknowledged they were ‘mindful of future risks’ to consumer demand and inflationary pressures even though the economic outlook was getting better.

The company’s results echo recent trading updates by Crest Nicholson, Redrow, and Barratt Developments, who all reported double-digit sales declines due to lower housebuilding volumes.

Mark Crouch, an analyst at eToro, said: ‘With building costs rising and Help to Buy coming to an end, headwinds look set to remain in place for the UK property market, particularly when it comes to buy-to-let investment.’

Bellway shares were 0.5 per cent lower at £27.96 on Friday morning, although they have climbed by approximately a quarter over the past 12 months.