Bellway Reports Strong Sales, Alleviates Concerns for Housebuilders

Bellway has revised its profit expectations upward, citing a strong performance during the critical spring selling season.

In a reassuring update for the housing market, the developer reported that it has been both selling more homes and achieving higher selling prices recently.

The company attributed the ongoing market strength to decreasing mortgage rates, alleviating concerns that demand might have weakened due to economic factors, including the impacts of President Trump’s trade policies and the increased stamp duty rates introduced in April.

Bellway’s latest forecast anticipates an annual operating profit of £299 million for the financial year ending in July, marking an increase of £6 million over previous analyst estimates.

Charlie Campbell, a housing industry analyst at Stifel, noted, “There was some apprehension in the market prior to this update. Bellway’s remarks indicate a stable market, which is reassuring to investors.”

Following the news, Bellway shares rose by 160p, a 6 percent increase, reaching £28.34 on Tuesday morning, driving up stock prices across the broader housing sector.

Competitor Vistry, operating under the Bovis Homes brand, saw a gain of 41.5p, or 6.9 percent, to reach 639p. Similarly, Persimmon increased by 57.5p, or 4.4 percent, to £13.60, while Barratt Redrow climbed 17p, or 3.8 percent, to 467p.

Founded in 1946 by John Thomas Bell in Newcastle, Bellway has evolved from a small family operation to a major player in the housing market, currently listed on the FTSE 250, boasting a market capitalization exceeding £3 billion.

Previously, analysts speculated Bellway would complete around 8,500 home sales this financial year. However, the company now predicts to achieve between 8,600 and 8,700 sales, which is an increase of approximately 1,000 homes from the previous year.

This uptick is attributed to a consistent rise in private reservations, driven by strong customer demand and improved affordability. The average fixed two-year mortgage rate has decreased from 5.3 percent last July to 4.6 percent today, as reported by Rightmove.

Currently, Bellway reports selling 0.67 homes per week across its 240 developments, an increase from the 0.51 homes sold per week recorded during the autumn and winter seasons. This improved sales rate has enabled Bellway to enhance its order book, which now stands at £1.65 billion, an 8 percent rise compared to the same period last year.

The average selling price of Bellway homes has also risen, now estimated at £315,000, up from the previous estimate of £310,000. This increase is attributed partly to house price inflation and partly due to changes in product offerings. This dual increase in sales volume and prices has led analysts to upgrade their forecasts for the company.

Jason Honeyman, Bellway’s chief executive, expressed satisfaction with the company’s “solid trading performance” during the spring and stated that the group is “on track to achieve strong growth in production volume and profitability for the complete financial year.”

In contrast, MJ Gleeson, a smaller competitor, recently indicated it was compelled to offer additional incentives such as complimentary carpets and improved kitchen amenities to drive sales. Conversely, Bellway reported that its use of incentives has remained stable.

Regarding build cost inflation, which Gleeson had highlighted as a concern, Bellway indicated that it remains in “the low single digits” and has not changed since earlier reports this year.