Reservations rise for housebuilder Bellway despite flat market

RESERVATIONS have risen for housing developer Bellway despite market conditions remaining flat.

The company, which has its West Midland base in Tamworth, said that during the 18-week period between August 1 and November 30, 2012,  reservations, net of cancellations, had risen to an average of 100 per week, an increase of 6% compared to the prior year.  

This growth in volume has been achieved from an average of 213 sites compared to 205 sites last year.

What has changed is the ability of customers to access higher loan to value mortgage finance, largely due to the continuation of the Government’s NewBuy mortgage indemnity scheme.  

The company has sites across the West Midlands including Birmingham, Wolverhampton, Walsall and Dudley.

The housebuilder said it was now pressing ahead with its strategy of delivering improved shareholder returns through sustainable, organic growth in volume, selling price and operating margin.

The period saw the group achieve 3,951 (2011 – 3,748) sales for the current financial year, representing 72% of its current annual target.  The board said it anticipated that legal completions would increase by around 5% for the six months ending January 31, 2013 and expected that the operating margin for the same period would slightly exceed the 12.5% achieved in the second half of the previous financial year.

A variety of sales incentives continue to be used in order to secure sales with NewBuy accounting for 10% of reservations taken in the period.  The group has continued to restrict the use of shared equity incentives, with these representing only 3% of reservations in the period, compared to 5% in the prior year.  The average selling price has increased by 4% to £195,800, reflecting continuing changes in product mix.

“The board continues to believe that improvements in shareholder return can be achieved through organic growth, given that land can be acquired where the return on capital is accretive to shareholder value,” it said.

“To that extent the group’s land teams have been active, resulting in expenditure of £91m on land and land creditors and modest net bank debt of £77m.  Given its balance sheet and operational capacity, the group is well placed to deliver future sustainable and responsible growth.”