Bellway Raises Housebuilding Expectations
Homebuilder Bellway dismisses affordability concerns, strengthens new construction plans following updated guidance
It's full steam ahead for Bellway as they expect to build more homes than initially anticipated this year. Thanks to a strong spring season and improved consumer demand, the homebuilder has revised its estimate for the construction of between 8,600 to 8,700 homes, up from the previous 8,500.
The boost in volume outlook isn't a one-off, either. Bellway remains optimistic about achieving 20% cumulative volume growth by July 2026. The company's positive momentum is evident in the increase in private reservations and stronger future orders[1].
The higher volume outlook has been fueled by robust trading in recent months[2], with stronger sales driven by buyers accelerating purchases ahead of the April expiry of temporary tax incentives for affordable and first-time buyers. The gradual interest rate cuts have also played a part in boosting affordability[2].
As for the house's cost, Bellway expects selling prices for the year to be around £315,000, up from the previous forecast of £310,000. The forward order book, a key industry indicator of near-term demand, has swelled by 7.7% to 5,759 homes as of June 1[1].
Bellway's CEO, Jason Honeyman, is confident about the company's growth prospects, stating that they're on track to deliver strong growth in both volume output and profits this financial year. The company is also optimistic about the new government's plans to reform the planning system, which could potentially unlock land supply and support an increase in new housing across the country[3].
The positive trading update has sent ripples through the housebuilding sector, with Persimmon and Taylor Wimpey shares also experiencing gains, mirroring the positive mood in the broader market[4][5]. While the exact impact on Bellway's share price isn't provided, the overall market response indicates a positive trend for housebuilders.
[1] https://www.bellway.co.uk/about-us/news-room/2022/bellway-plc-trading-update-10th-august-2022
[2] https://www.bellway.co.uk/about-us/news-room/2022/bellway-plc-half-year-results-2022
[3] https://www.bellway.co.uk/about-us/news-room/2021/bellway-plcs-position-on-mix-of-homes-and-lands
[4] https://www.bbc.com/news/business-62538690
[5] https://www.ft.com/content/91089e7e-eb9e-4c8f-bd02-ca35e2fdfd09
- Investing in Bellway, a leading housebuilder, showcases a promising opportunity in the real-estate business due to their expectations of constructing more properties this year and aiming for 20% cumulative volume growth by 2026.
- Finance experts may find an attractive avenue for mortgage investments with Bellway, as they expect selling prices for homes to increase and have a growing future order book, indicating stronger demand in the property market.
- The government's plans to reform the planning system could potentially create new business opportunities for housebuilders like Bellway, making investments in the real-estate sector more attractive and supporting an increase in new housing across the country.
