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Bellway hails record first half sales despite a rise in cancellation rates

The measured use of incentives has continued on certain sites. These have been generally focussed towards higher value plots, where the group has limited exposure and where sales rates tend to be a little slower

House builder
The rate of house price inflation continues to moderate despite the "Help to Buy" scheme

If the UK housing market is in trouble no one appears to have told housebuilder Bellway PLC (LON:BWY), which is seeing sales at record levels.

In a trading update covering the six months to the end of January 2019, the FTSE 250 company said the weekly reservation rate rose by 2.8% to 183 from 178 in the same period a year earlier, the highest level ever achieved by the group in the first half of its fiscal year.

READ Bellway still bent on expanding the business

Total revenue for the period is expected to be up by more than 12% to just shy of £1.5bn from £1,324.4mln the year before.

The number of houses completed rose by 5% to 5,007 from 4,741 the year before while the average selling price rose by 6.5% to £293,800 from £275,945.

Bellway said the ongoing discussions around the UK’s forthcoming exit from the EU had “inevitably had some bearing on customer confidence in the wider economy” and this might be one reason why the cancellation rate had risen to 13% from 11% the previous year.

With the government’s “Help to Buy” scheme still acting as a catalyst, Bellway’s order book looks strong, with a value of £1,171.3 million (2018 – £1,297.4 million), comprising 4,587 units (2018 – 4,629 units).

The company said that volume output for the full fiscal year should exceed last year’s record of 10,307 homes.

“Early signs suggest that customer demand and reservations will follow their usual seasonal trend; however, the board remains cautious given the uncertainty regarding the UK’s forthcoming exit from the EU and the extent to which this will affect wider customer confidence,” Bellway said.

“Further, disciplined investment in high-quality land, together with a sizeable forward order book, ensure that the group is well placed, over the longer term, to continue increasing its contribution to the supply of much needed new homes,” said Paul Hampden Smith, the chairman of Bellway.

The shares opened 1.1% lower at 2,859p.

Quick facts: Bellway PLC

Price: 2328 GBX

Market: LSE
Market Cap: £2.87 billion

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