Bellway sees uptick in sales as falling inflation boosts demand for new houses

Housebuilder Bellway said falling inflation and improving consumer confidence have helped push up its sales this spring versus last year.

The FTSE 250 firm said the net private reservation rate, the number of people putting their names down for a new home, at its active outlets had risen to 0.62 per week during the four months to June 2, compared to 0.58 for the same period last year.

Demand has benefited from an “improvement in affordability, driven by a moderation of both mortgage interest rates and consumer price inflation and an increase in wages”, the company said in a Friday trading update.

Like all housebuilders, Bellway is emerging from a bruising period.

Since December 2021, the Bank of England’s base interest rate has soared from 0.1% to 5.25%, making it much less affordable for people to buy homes.

In anticipation that the Bank might start cutting rates later this year, lenders have started to cut the interest rates they charge mortgage borrowers.

The Newcastle-based housebuilder said its order book has swelled 21% since the start of the year to 5,346 homes, worth about £1.45 billion.

The increase since January is down to an “improvement in trading and growth in outlet numbers”.

However, the order book is down on the 6,172 homes recorded this time last year.

Bellway said its house prices had remained firm during the period, with the overall average selling price expected to be about £305,000.

The figure is up from previous guidance of £295,000, with the uptick mainly due to changes in product mix, it added.

Jason Honeyman, Bellway chief executive, said: “Bellway has delivered a solid trading performance supported by improved affordability and a seasonal uplift through the spring, and we remain on track to deliver full year volume output of around 7,500 homes.

“We have been encouraged by ongoing healthy levels of customer interest and combined with the strength of our outlet opening programme, we continue to expect a year-on-year increase in the forward order book at July 31 2024.”

The trading update came as Halifax said the average UK house price fell by 0.1% month on month or or around £170 in cash terms in May.

The typical property value was £288,688, which was 1.5% higher than a year earlier, the building society said in its monthly index.