Bellway to open more sites as it says state of market ‘perplexing’

The housebuilder said it will continue its strategy of targeting resilient pockets of demand in the north as well as the more buoyant south.

Bellway yesterday reported a year of growing profits and volumes, selling 4,922 homes in the year to the end of July, a seven per cent increase on a year earlier.

The average price of its properties increased almost eight per cent to £175,613 as the builder shifted its focus from apartments to family homes.

Profits before tax surged more than 51 per cent to £67.2m, prompting the builder to hike its final dividend to 8.8p, a 31.3 per cent increase. Turnover was up 15 per cent at £886.1m.

Finance director Alistair Leitch said the group is targeting growth of five per cent this year, but warned the risk of the market deteriorating is growing.

“It will remain as it is – but there’s an increasing chance that it may decline further,” he said.

Mr Leitch, who yesterday announced he is retiring in January to be replaced by chief accountant Keith Adey, said the market’s current stability is perplexing given the increasing economic uncertainty and pressure on household incomes.

“At the moment it’s stable. What we cannot really understand is against the backdrop of what’s going on globally, economically and in our own country, we’ve still been selling houses at the rate we’re selling.”

The group is currently selling around 85 houses per week, he added. But with sales now tailing off due to the regular seasonal slump, Mr Leitch said the new year will be pivotal.

“Forget about the next two and three months – it will be what happens in the early part of 2012. If it picks up in the same way as this (calendar) year we can operate at the volumes we’ve got.”

Rather than relying on increasing the rate of house sales per site, Bellway aims to grow by opening more sites. It started August with 205 sales outlets, and plans to increase this number by five per cent this year.

“Whilst developments in and around London, where we presently operate from about 35 sites, have been most resilient, there are many areas throughout the rest of the country where activity has also been encouraging,” said chairman Howard Dawe.

Bellway said its six northern divisions sold 2,345 homes over the year, up 18 per cent on a year earlier. However, while northern sales prices were static, southern prices increased by 13.1 per cent over the year.

Surveys have pointed to an increasing housing gulf between the north and the south, a problem the Yorkshire Post is trying to tackle through our Give Us a Fair Deal campaign. Website Rightmove this week said asking prices in the South have reached more than double those in the North, creating a record divide.

Southerners are typically putting their homes on the market for £336,743, compared with £164,347 in the North. The £170,000 chasm is the largest since Rightmove’s records began in 2002. Since the start of the credit crunch in 2007 asking prices in the south have risen 5.4 per cent, the survey found, while in the north they have fallen 9.4 per cent.

Mr Leitch said while Yorkshire is “not the strongest region at the moment”, Bellway has seen encouraging performances at sites in Leeds and Doncaster.

“I know it’s a cliché but it comes down to location, location, location,” he said. “We are still buying land in the north and still buying land in Yorkshire.

“We’re not myopic on the south. We’re a national builder and will remain that.”

Bellway said reservations so far this year are up 11 per cent, after starting August with 2,497 reservations.

It had a land bank of 18,086 plots with planning permission, with another 13,000 plots in the planning pipeline. Shares in the company lifted 21p to close up 3.1 per cent at 698.5p.

Analysts at Royal Bank of Scotland issued a buy rating and said: “Whilst Bellway shies away from too much self-promotion the results highlight that Bellway is just getting on with the task of driving its margin and profit recovery.”

Shore Capital, also ‘buy’, said in a note to investors: “The company’s balance sheet remains strong, with circa £3m of net cash at the year end and total facilities of circa £290m leave the company well placed to transact in the land market.

“Bellway remains our preferred company in the sector, operating with a relatively short land bank, a strong balance sheet and continued focus increasing volumes and operating margins.”

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