Bellway PLC (LSE:BWY) saw reservations for its private homes decline 44% in the past six months amid a rise in mortgage rates and the end of the government’s Help to Buy scheme, though activity levels have started to improve.
In the half-year to 31 January 2023, the housebuilder completed 5,695 home sales, almost exactly the same as the prior year, with average selling prices up 1.6% to £316,900.
The overall reservation rate declined by 32% to 138 homes per week, with private reservation rates down to 91 per week from 162 the year before.
At the halfway period, net cash stood at £292mln, around £50mln better over the period thanks to the lower land payments resulting from its more cautious approach towards investment, while the forward order book shrank to 5,108 homes from 6,628 and its value to £1.4bn from £1.9bn.
Similar to its sector peers, visitor numbers and reservation rates in January were reported to have improved from the end of the calendar year.
If this is sustained through the spring, the group said it would be on track to deliver full-year volume output of around 11,000 homes, a slight decrease from the 11,198 homes in the previous year.
Analysts at broker Peel Hunt noted that while activity levels have improved in the new year, “they remain constrained due to stretched levels of affordability” and that cost inflation continues to come through the supply chain, particularly in energy intensive products, “but we would expect to hear off decline in other material (steel, timber etc) and some trades”.