Bellway reservation rate falls 32% amid mortgage woe

Newcastle-based house building giant Bellway said its overall reservation rate fell 31.7% to 138 per week during the six months ended January 31, 2023.

In a trading update, the Newcastle firm said weaker private demand was partially offset by the group’s programme of accelerating the construction of social homes.

Bellway said elevated mortgage rates and the end of Help-to-Buy contributed to a 43.8% decrease in the private reservation rate to 91 per week.

Bellway nonetheless reported a “robust” first half performance, with record completions of 5,695 homes (2022 – 5,694 homes) and a 1.6% increase in the average selling price to £316,900.

The company said H1 housing revenue is expected to increase to over £1.8 billion from £1.77 billion.

The firm said a “combination of strong volume output and the decrease in reservation rates has resulted in a lower, yet still sizeable forward order book, which comprises 5,108 homes (2022 – 6,628 homes), with a value of £1,386.8 million (2022 – £1,940.9 million).”

It said visitor numbers and reservation rates in January have improved from the levels in the fourth quarter of calendar year 2022 and, if sustained through the spring, the group is on track to deliver full year volume output of around 11,000 homes (31 July 2022 – 11,198 homes).

Bellway CEO Jason Honeyman said: “Bellway has delivered another strong performance, with our teams and supply chain partners demonstrating their ongoing commitment to provide high quality homes and service for our customers.

“Following our Preliminary Results in October 2022, we experienced a period of weaker trading through to the end of December, with affordability constrained by higher mortgage rates and economic uncertainty affecting consumer confidence.

“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.”