The number of houses completed by developer Bellway has fallen substantially over the last year, though bosses are hopeful of a future growth.
New results for the North East-based housebuilder, for year to the end of July 2024, also show sizeable falls in revenue and profits but the company pointed to a more recent easing of the affordability and cost inflation headwinds that have dogged the house building market in recent years.
The figures include a 30.1% fall in completions to 7,654 as revenue also tumbled by 30.1% to £2.38bn. Operating profits were slashed by more than 57% to £212.8m and pre-tax profits fell 62% to £183.7m. Bellway said a fall in site profitability had been driven by cost inflation, use of promotional incentives to entice buyers and a generally slower market since 2022.
But bosses at the FTSE250 firm sought to paint a more hopeful picture for the year ahead, pointing to an easing of some of those pressures and evidence that consumer confidence was building as interest rates fell and wages increased. Bellway's forward order book grew in 2024 to 5,144 homes, up from 4,411 homes in 2023, and increased in value by 18.4% to £1.4bn.
Providing the market remains stable, the firm is targeting completion of 8,500 in its current financial year, with average selling price also expected to creep back up to around £310,000, from £307,909 in 2024. The firm said its "high quality" landbank would provide the basis for future growth, with more strategic land acquired during the year including option agreements for 35 sites, compared with 19 the previous year.
Bellway's group finance director, Keith Adey, told BusinessLive that plans were afoot to reopen the firm's South Midlands operation - one of several divisions it closed amid cost cutting in response to the market slowdown. There are also ambitions to ramp up activity in its North East heartland, including the potential for future recruitment in line with the 2025 growth expectations.
Jason Honeyman, group chief executive, said: "Bellway has delivered another resilient performance despite the challenging operating conditions during the year. While a lower order book at the beginning of the financial year drove the reduction in the number of housing completions, customer demand through the second half benefitted from a moderation in mortgage interest rates which has eased affordability pressures and supported an increase in reservations.
"The combination of these improving trading conditions and our strong outlet opening programme has generated a healthy increase in the year end order book. As a result, we are well-placed to deliver a material increase in volume output in financial year 2025.
"We welcome the new Government's plans to reform the planning system, which in time is expected to unlock land supply and support an increase in new housing across the country. Against this improving backdrop and if market conditions remain stable, our operational strength and robust balance sheet, combined with the depth and quality of our land bank, provide an excellent platform for Bellway to deliver strong multi-year growth and to continue creating long-term value for all our stakeholders."
