Record profits for Bellway as demand for homes increases

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Housebuilder Bellway has posted record annual profits and said it is well placed for further growth after strong trading in recent weeks.

The Newcastle-based company beat forecasts with a profits jump of 75 per cent to £245.9m in the year to July as it sold more homes at higher prices.

Demand was boosted by the Government’s Help to Buy scheme while it said initiatives this year from the industry and the Bank of England to curb lending limits should ensure a long-term supply of mortgage finance.

Bellway added that in the first nine weeks of its current financial year its forward order book lifted to a record £975.3m and that it expects to grow volumes by around 10 per cent this year. Shares were 3 per cent higher.

The business said last year strong demand allowed it to sell 6,851 homes, up 21.2 per cent at an average selling price that rose 10.4 per cent to £213,182.

It said it was able to boost prices by focusing on building two-storey family homes and apartments in London, as well as by reducing incentives.

The company added that the average selling price on housing completions in London was just under £300,000.

The business expanded by adding two divisions in the last year – Thames Valley and Manchester – to bring the firm up to 15 operating units. It added all divisions increased sales and profit in the period.

Chairman John Watson said: “This has been an exceptional year of progress for the group in which we have delivered record revenue and profit.”

There have been signs the housing market is cooling with the annual rate of house price growth slowing in September to 9.4 per cent from 11 per cent the month before, according to mortgage lender Nationwide.

But Bellway said in the nine weeks since August 1 its reservations have averaged 128 per week, compared to 122 a year ago. It added that it planned to open more new divisions this year.

Analysts at Numis said: “In our view, the main focus will be on current trading and we are encouraged by the commentary.”

Analyst Alastair Stewart at Westhouse Securities said its outlook was positive for sentiment across the sector.

Mr Stewart said he saw scope for a further increase of around five per cent in his 2015 pre-tax profit estimate, which currently stands at £298m.