Newcastle-based house building giant Bellway said its revenue fell 29.6% to £1.273 billion for the six months ended January 31, 2024, “driven primarily by the lower level of private reservations in the prior year.”

Statutory profit before taxation fell 61.6% to £117.4 million for the first half. Interim dividend per share is down 64.4% to 16p.

However, the Newcastle firm said it has been encouraged by the improvement in reservations since the start of the new calendar year amid a gradual reduction in mortgage interest rates.

Bellway reported “encouraging recent trading and improving outlook.”

It said that in the six weeks since February 1 “the private reservation rate increased by 20.7% to 163 per week (1 February to 12 March 2023 – 135), representing a private reservation rate per outlet per week of 0.67 (1 February to 12 March 2023 – 0.56).”

Bellway added: “The overall reservation rate rose by 7.8% to 207 per week (1 February to 12 March 2023 – 192).

“Reflecting recent trading and volume output, the order book has increased from the level at 31 January 2024. 

“The forward order book at 10 March 2024 comprised 4,914 homes (12 March 2023 – 5,842 homes) with a value of £1,301.9 million (12 March 2023 – £1,602.0 million).   

“Headline pricing has remained firm and, in line with previous guidance, the overall average selling price for financial year 2024 is expected to be around £295,000 (31 July 2023 – £310,306). 

“The moderation from 2023 reflects a further planned increase in the proportion of social homes in the second half of the current financial year and the ongoing use of targeted sales incentives.

“In financial year 2024 the board continues to anticipate a reduction in the underlying operating margin of at least 600 basis points from the level in the prior year (31 July 2023 – 16.0%). 

“The decrease will be driven by a lower volume output and average selling price, together with the effects of build cost inflation and extended site durations.  

“Bellway is well-placed to deliver volume output of around 7,500 homes in the current financial year (31 July 2023 – 10,945 homes) and, if recent reservation rates are sustained throughout the spring, to build the order book through the second half which will serve as a platform for a return to growth in financial year 2025.

“The combination of Bellway’s operational and financial strength leaves the group very well-placed to deliver long-term sustainable growth and ongoing value creation for shareholders.”

Bellway CEO Jason Honeyman said: “Bellway has delivered another resilient performance in a period of challenging trading conditions. 

“Although the economic backdrop remains uncertain, the gradual reduction in mortgage interest rates throughout the first half has helped to ease affordability constraints and we have been encouraged by the improvement in reservations since the start of the new calendar year. 

“The group remains on track to deliver volume output of around 7,500 homes (31 July 2023 – 10,945 homes) in the full financial year and, if market conditions remain stable, we are well-placed to build the order book through the second half which will serve as a platform for a return to growth in financial year 2025.

“Overall, the long-term fundamentals of the UK housebuilding industry remain attractive, given the shortage of energy efficient and affordable homes across the country. 

“We remain confident that the group’s robust balance sheet and operational strength, combined with the depth and quality of our land bank, will enable Bellway to successfully navigate changing market conditions and capitalise on future growth opportunities.”