Bellway predicts flat volume for 2023 on ‘improved’ reservations

Volume housebuilder Bellway has said it is on course to build around 11,000 homes this year following an “improved” level of reservations since New Year.

However, this improvement follows a huge drop-off in demand in the wake of the mini-budget in September, which Bellway said in a half-year trading update today have seen private reservations since July fall by 44% on the previous year.

Building 11,000 homes would be a reduction on the 11,198 homes built by Bellway last year, and is slightly below its estimate when it last updated the market, in October shortly after the mini-budget, when it said it volume output would most likely be “similar to the prior year”.

Prior to the mini-budget, Bellway had been expecting to deliver 10% volume growth in the current financial year, to July 31 2023.

The firm said today that its overall reservation rate had reduced by just 32% to 138 homes per week, “with weaker private demand partially offset by the Group’s programme of accelerating the construction of social homes.”

It said: “Visitor numbers and reservation rates in January have improved from the levels in the fourth quarter of calendar year 2022”, and that if this was sustained through the spring, the Group would deliver full year volume output of around 11,000 homes.

Bellway said the private reservations fell to 91 homes per week overall, compared to 162 in the previous year, but have recovered to 107 per week in January, albeit the comparative figure for last year was 195.

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Bellway’s volume figures are boosted by its delivery of “record” completions in the first half of the year, despite weakening reservation rates, with 5,695 completions reported – one more than in 2021.

The firm said the size its forward order book had reduced by 23% to 5,108 homes, with the value of the orders down by 29% to £1.39bn.

Bellway said it bought just 2,428 plots in the period, nearly three quarters down on the 8660 plots bought in first half of the year in the previous year, reflecting “a more cautious approach towards land investment.” It said it walked away from the purchase of three previously agreed plots totalling 418 plots.

Jason Honeyman, chief executive, said: “Since the start of the new calendar year, mortgage rates have fallen from their recent peak, and we have been encouraged by a seasonal increase in visitor levels and an improvement in reservations.

“Looking ahead, Bellway’s experienced team and operational strength will enable us to navigate through changing market conditions. The Group has a robust balance sheet, with substantial cash resources and it is well-placed to invest, when compelling market opportunities arise, to continue to deliver returns for shareholders in the future.”

The firm said that while still lower than January 2022, it had been “encouraged” by visitor numbers at outlets in January, which were “significantly ahead of the levels in the fourth quarter of calendar year 2022”. It added that “website traffic and enquiries have also been strong, providing some grounds for optimism for the spring selling season”, while headline pricing has “remained robust”, albeit, “targeted incentives” were being used in some instances to secure reservations.

The firm said it will report revenue for the half year of £1.8bn, up from £1.78bn last year.

Bellway said it was reviewing the terms of the recently published contract underpinning the government’s “developer pledge” to fix fire safety issues on its existing buildings, and did not anticipate making any further financial provisions related to it.