Bellway hopes spending review will help clear the uncertainty

The group, the first of the UK's big housebuilders to report on the traditionally busy autumn selling season, said sales have only picked up modestly as potential homebuyers delay spending.

"I hope that it (the spending review) clears the uncertainty, but it won't clear the detailed uncertainty," said finance director Alistair Leitch.

"The housing market will be moribund until Christmas at least.

"The danger or fear for the housing sector is that the spring pick-up does not really happen."

Despite this uncertainty Bellway said it is well positioned for the next six months, whatever happens. The group yesterday posted results for the year to the end of July in line with expectations.

It made pre-tax profits of 44.4m, compared with last year's 36.6m losses, when writedowns drove it into the red.

Its average selling price was up 9,140 to 163,175, mainly due to shifting its product mix away from apartments and townhouses towards two-storey family housing. It expects to achieve a 170,000 average price this year.

Turnover was up 12.4 per cent to 768.3m. Bellway ended the year with net cash of 59m and has a 397m forward order book.

Bellway's completed sales were up five per cent to 4,595 homes, but since then, autumn sales are down on a year ago.

This has forced it to abandon its target of raising sales volumes by 10 per cent this year. "We maybe got carried away with our predictions in the spring," said Mr Leitch.

Mr Leitch said a recent site launch in Doncaster epitomised the market's malaise.

"We had over 100 visitors to the site but we didn't get any reservations. There are people out there interested, but they're going to wait."

Mr Leitch said buyers are asking themselves: "'Why would I even contemplate buying a house now?'"

"'Unless I need to, through work or personal circumstances, I'm going to wait and see how the whole thing (spending review) pans out.'

"If I'm in the public sector, I'm going to think, 'Will I have a job?'

"If I'm in the private sector, 'What effect will it have on my job? Is my company going to be part of the ripple effect?'"

Bellway said a north/south housing market divide has continued, with the south contributing to 57 per cent of completions during the year.

In Yorkshire, Bellway sold 210 homes, compared with 110 completions a year earlier.

"The Yorkshire market was really ravaged in 2008/9," said Mr Leitch. "The ship has steadied and they have doubled output, albeit in a difficult market.

"We're seeing opportunities in the north (but) there's a strong case that can be made for housing in the south because the market is a little bit more stable."

Bellway upped its final dividend by 11.7 per cent to 6.7p per share. Despite this, its shares fell 6.1 per cent to 565p, shedding 36.5p.

Investec downgraded its estimates for next year by 20 per cent and put its housing sector recommendations and target prices, excluding Berkeley Group, under review.

Other brokers were more positive, however, citing Bellway's strong performance.

"Current trade is exactly in line with our expectations," said Panmure, keeping a 'buy' rating on the stock.

Hargreaves Lansdown analyst Keith Bowman said: "Bellway continues to display its pedigree status.

"A cash balance and a double digit increase in the dividend payment is something which many rivals can only aspire to."

Investing in the land bank

Along with other housebuilders, Bellway has taken advantage of the housing market lull to top up its land bank with "opportunistic land buying".

It spent 208m on new land in the year to the end of July, and believes this will help ensure it is ready for the upturn – when it comes.

Despite this, Bellway is not replacing land at the rate it is building on it.

Its bank of plots with planning permission dipped nine per cent to 17,602, although it has increased its land bank awaiting planning permission from 14,000 to 15,000 plots.

Based on this, its total land bank gives Bellway about seven years' supply, which does not include its 3,000 acres of long-term holdings.

Since July, Bellway has increased its number of show homes, revamped its website, and hopes to increase sales outlets to 200 by the spring.

"Divisions have released more homes to build.

"We therefore anticipate that work in progress levels will increase as the year progresses," said the company.