Bellway has reported a record year of sales as rising house prices offset rising energy and building costs, with the housebuilder predicting a bumper 2023 despite higher interest rates and the cost of living crisis.
The company reported a 13% rise in revenue to a record £3.5bn and 10.5% growth in completions to a record 11,198 in the financial year to the end of July.
Bellway said it benefited from a higher-than-expected increase in the average selling price, which rose 2.6% to £314,000.
“Bellway has delivered another strong performance, with volume production and residential income reaching record levels against a challenging operating environment and macroeconomic uncertainty,” said CEO, Jason Honeyman.
Despite mounting economic pressures as the Bank of England raised interest rates despite predicting an impending recession, Bellway predicted another record year. Home completions are expected to reach 12,200 – about 12% more than before Covid 2019. The company’s forward order book stands at 7,223 homes with a value rising 4.5% to £2.1bn – another record – and it said it has already sold almost 50% of private completions.
During the year, the pace of business increased as buyer demand remained strong with the booking rate increasing by 6.9% to 218 a week, while the cancellation rate remained at a low 13%.
“Confidence among customers is strong,” the company said. “Although interest rates and fuel costs have contributed to the increase in the cost of living, Bellway’s range of modern, well-designed new homes continues to provide an attractive and affordable proposition for our customers.”
The company expects the average selling price to fall slightly to just over £300,000 in the year to the end of July 2023 due to previously announced changes in geographic and product mix.
Last week, Halifax reported the first fall in house prices in more than a year, as the country’s biggest lender warned of the impact of higher interest rates and the wider cost-of-living crisis.
Last week, the Bank of England announced its biggest rate hike in 27 years, in a bid to curb rising inflation as gas prices push up UK energy bills this winter.
The 0.5 percentage point increase takes the UK base rate to 1.75%, a 13-year high. At the same time, it said Britain would enter a recession by the end of 2022 that would last more than a year, and predicted inflation would rise above 13% – the highest since 1980.
“Record revenue, a record number of home completions and a growing order book going forward, if the rise in the cost of living and mortgage rates is about to turn the housing market, nobody told Bellway,” said Anthony Codling, the chief executive of real estate data firm Twindig.
“The challenge for the UK housing market appears to be a lack of homes for sale rather than a lack of buyers, which is welcome news for house builders.”