Bellway adds more gloom to property market

The doom and gloom continues in the housing market today as housebuilder Bellway reported a 45% fall in reservations of its homes in the second half of the financial year, compared with the same period last year.

Bellway added that completed sales had dropped by 14% compared with last year as the mortgage squeeze meant that prospective buyers were unable to secure funding.

The news is further proof of the housing market slowdown as property prices have fallen over recent times and thousands of construction jobs have been lost.

The Newcastle-based housebuilder is the first in a long line of others in the construction industry set to announce half-year results.

The average selling price fell from £173,300 to £169,000, said the company, as a higher proportion of cheaper housing association properties were built.

Bellway focuses on the cheaper end of the market and has increased the percentage of social housing it builds for housing associations to 20% of its volumes, to protect it against the market.

Bellway said it was optimistic that it would avoid the widespread land write-downs that other housebuilders have been hit with.

Bellway’s chief executive, John Watson, said currently we are still showing a 15% margin, so why do we need a write-down. There may be some sites we purchased last year that will show a lower margin than that but we do not need to write-down across the board.

Mr Watson added that he does not see an end to the mortgage crisis in the short-term and this has caused the sharp fall in new home sales.

Shares in Bellway have lost 75% of their value since April last year and lost 10p today following the results.

Discuss this in the Finance Markets forums

Story link: Bellway adds more gloom to property market