Bellway shrugs off housing market concerns as demand remains strong

Housebuilder Bellway has brushed aside concerns that the cost of living crisis is set to dampen the roaring property market as it revealed higher than forecast prices and strong buyer demand.

The Newcastle-based group saw completions hit a new record in its half-year to the end of January, up 0.7% at 5,694 homes, and said it remained on track to increase homes built by 10% this year.

It cheered strong ongoing underlying demand, with reservations up 5.8% to 202 a week, while average house prices lifted 2.8% to a better-than-expected £311,800.

The group now expects prices to be over £300,000 for the full financial year, having previously forecast values to begin easing back.

It comes as Halifax figures on Monday showed UK house prices hit a record high of £276,759 at the start of 2022 after increasing by around £24,500 over the past year.

But the lender warned the pace of growth was expected to slow considerably over the next year as households face extreme pressure on budgets from soaring inflation, while mortgages will become more expensive due to interest rate rises.

The Bank of England hiked interest rates to 0.5% from 0.25% last week – its first back-to-back rise since 2004 – and signalled more increases are on the way as inflation is set to head to a 31-year high this spring.

Bellway said prices were being held up so far by changing demands amid the pandemic, with buyers looking for “developments on the edge of settlements, which offer more spacious, family housing, attractive to those customers with home-working requirements”.

It said in spite of the higher price forecasts for the year, it expects selling prices to “moderate slightly” in following years as it switches to different home types to offset the end of the Government’s Help to Buy scheme.

The group added: “Notwithstanding the recent, modest rises in interest rates and cost-of-living inflationary pressures, our mid-market product remains affordable in a historical context.”

Its trading update showed housing revenues are on track to grow by more than 3% to around £1.8 billion in the first half, while its order book stands at £1.9 billion – up by nearly a fifth (19%) on a year ago.

Bellway did not set aside more cash for fire safety works on potentially dangerous cladding on its tall buildings, having already put by £164.7 million between 2017 and July 31 last year, which also covers amounts for buildings between 11 metres and 18 metres in height.

The Government recently announced that all leaseholders in high-rise blocks should not have to pay for remediation works on dangerous cladding, including those in properties between 11 metres and 18 metres tall.