Steeper mortgage costs and cost of living pressures continue to hamper demand, according to housebuilder Bellway.
In its latest results, the North East-based developer said its overall reservation rate fell by more than 28% to 156 per week in the year to the end of July, compared to 218 in 2022. It blamed challenging market conditions that have tempered trading for housing firms since a post-Covid boom.
Preliminary results revealed to investors on the London Stock Exchange that revenue fell by 3.7% to £3.4bn as operating profit also fell, by 16.7% to £543.9m. The performance was described as in line with expectations as Bellway has now set its sights on a lower number of yearly house completions of around 7,500 homes, compared to 10,945 homes in 2023 and 11,198 homes in 2022.
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The firm said it wanted to return to growth of its forward order book which was down to 4,411 homes at the end of July, compared to 7,223 the year before. In the face of market challenges, Bellway has frozen recruitment and closed two of its operating divisions - a move it said would likely reduce group headcount by around 5%. Speaking to BusinessLive following publication of the results, group finance director Keith Adey said he felt the business now had the right structure to deal with a "much slower" year in 2024.
He said: "I think it's important that we haven't cut too deeply. We want to have that resilience to look beyond the next 12 months of uncertainty and avoid the deep cuts that we made back in 2009."
Meanwhile higher overheads and use of sales incentives have eaten into the firm's profit margin, which decreased by 250 basis points to 16% from 18.5% last year.
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Modelling which took into account what Bellway considers the "most severe but plausible" scenario - including recession and a further fall in consumer confidence - showed first half private completions next year could fall to 55% of this year's number. However a recent fall in the 海角视频 Consumer Price Inflation was said to have given the firm grounds for cautious optimism for the market.
Jason Honeyman, group chief executive, said: "Bellway has delivered a resilient performance against a backdrop of rising mortgage interest rates and challenging market conditions. Looking ahead, our operational strength and experienced teams will enable the Group to successfully navigate a changing market, and we will maintain a clear focus on delivering high-quality homes to our customers and making further progress against the priorities set out in our 'Better with Bellway' sustainability strategy.
"The depth of our land bank and robust balance sheet provide ongoing strategic flexibility and scope for outlet growth in the year ahead. Notwithstanding the near-term market challenges, Bellway remains very well-placed to capitalise on future growth opportunities and to continue creating long-term value for all our stakeholders."