Bellway PLC (LSE:BWY) has indicated new home sales are likely to "decrease materially" in the current year with the downturn attributed to the surge in mortgage rates, which has created a challenging trading environment.
In its latest update for the 12 months ending 31 July 2023, the Newcastle headquartered builder reported housing revenue of approximately £3.4 billion, a slight decrease from the previous year's £3.52bn.
This figure aligns with the company's prior forecasts. The total number of homes completed stood at 10,945, down from 11,198 in 2022, with an average selling price of £310,000, a minor drop from the 2022 average of £314,399.
The company's underlying operating margin is projected to be around 16%, a decrease from 18.5% in 2022.
This reduction is primarily due to increased build costs, overhead inflation, prolonged site durations and a heightened reliance on targeted sales incentives.
The value of the forward order book has decreased to £1.19 billion, encompassing 4,411 homes, down over £1 billion on the comparable period last year.
"The backdrop of macroeconomic uncertainty and cost of living pressures affected consumer demand during the year and, given affordability remains constrained by higher mortgage interest rates, underlying trading conditions are likely to remain challenging in the near term," said chief executive, Jason Honeyman.
"To help mitigate this, and notwithstanding ongoing delays in the planning system, the depth of our land bank provides scope to deliver outlet growth in the current financial year and beyond."