Bellway, the UK's fourth-largest housebuilder, posted an 82 per cent fall in annual pre-tax profit, beating market expectations, and said its strong cash position places it in a good position should the market mount a robust recovery.

But the housebuilder struck a note of caution over a sustained recovery, as rising unemployment casts a long shadow. "We're worried that another dip will happen," cautioned chief executive John Watson.

The builder cited more evidence of a north/south divide, as demand in the south holds up far better than the north.

"As the economy in (the north) receded more quickly, especially in Scotland, Yorkshire and the North West, consumer demand eroded rapidly in these locations," said Mr Watson

Bellway's six northern divisions saw sales tumble 45 per cent to 1,833 homes over the year to the end of July. The average northern selling price was down 14.7 per cent to £134,200.

By contrast, its seven southern divisions saw sales dip 21 per cent to 2,547 homes, with the average selling price falling 7.9 per cent to £168,300. Generally housing developments in and around London have proved more resilient than elsewhere in the country, Bellway added.

"The south is always the engine room in the housing market," said Mr Watson. "Whatever happens in the south ripples outwards." But he added the relative resilience seen around London has not yet been echoed in Yorkshire, where cities are being held back by an oversupply of high-rise apartments.

"I wouldn't say that the ripple effect has moved up to Yorkshire yet," he said. "I wouldn't say the market (in Yorkshire) has moved on much from 12 months ago. There's still quite a lot of overhang (of apartments) in cities such as Leeds."

In total Bellway sold 33 per cent fewer homes over the year, with 4,380 legal completions. Its average selling price across the UK was down 9.3 per cent to £154,005.

Before exceptional costs of £66.3m, which included writing down the value of its land, it made a pre-tax profit of £29.7m, compared to £165.7m a year earlier, with turnover of £683.8m down from £1.15bn.

Since its year end, Bellway said "tentative signs of stabilisation" have continued to emerge, such as increasing visitor levels and reservation rates. Numerous surveys have pointed to increasing confidence in the market, with mortgage lender Halifax saying house prices rose 1.6 per cent in September month-on-month.

But Mr Watson urged caution. "Housing is a confidence thing. Without good and robust employment going forward that confidence will get eroded."

Even so, Bellway believes its balance sheet provides it with "an even stronger position to expand as and when the market shows tangible signs of recovery." Through the recession, it has operated a "partial hibernation" policy, slashing spending on land, mothballing sites and cutting costs.

This allowed it to slash debt by £180.9m to £36.8m at the year end. Since the end of July it has also raised a further £43.7m from shareholders. It raised the cash to buy land, by contrast to peers Barratt Developments and Redrow, which tapped investors for cash to strengthen their balance sheets.

Since August it has agreed to spend £120m on land, mainly in the south, which has potential for more than 3,370 homes. Bellway added it has headroom of £370m to buy more land.

The company is the only national builder to currently pay a dividend, and kept its final payout at 6p per share.

Stockbroker Panmure Gordon upgraded the company to "buy" from "hold" following the results and said it expected to raise its pre-tax profit forecast to about £24m from £15.6m.

"We believe that Bellway is well placed to take advantage of the current market opportunities, and this should stand the business in good stead for the future," it said in a note.



Capital leading the recovery

The north/south divide cited by Bellway was underlined by a survey by the Royal Institution of Chartered Surveyors (RICS) yesterday.

The organisation said a lack of properties on the market was continuing to underpin the house price recovery, with around 22 per cent more surveyors from across the country saying prices rose rather than fell during the month, the highest proportion since May 2007.

But RICS added the improvement was being driven by London and the South East.

Property prices continued to fall in other areas, with 18 per cent more surveyors seeing price falls in Yorkshire and the Humber region than those who saw rises.