Bellway encouraged by start to year

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Bellway said housebuyer activity had been 'encouraging' so far this year

Bellway has offered some hope from the fragile housing market after it said buyer activity had been “encouraging” so far this year.

The housebuilder reserved judgment on the all-important spring selling season, but was upbeat over site visitor numbers and reservations in January after a snow-hit end to 2010.

It completed 3.8% more sales in the half-year to January 31 than a year earlier, at 2,332, and said average selling prices rose around 8% to £168,000.

Bellway said much of the price increase came from a shift from flats to traditional two-storey home sales, although it was also helped by greater market stability than last year.

There have been fears for the housing market in 2011 once public spending cuts start to bite, with some economists predicting falls of up to 10%.

Halifax offered some relief last week when it said prices rose 0.8% in January, but this was seen largely as a bounce-back after a 1.3% drop in December’s snow.

Bellway said: “Whilst site visitors and reservations were obviously hampered by the cold weather in December, the number of visitors and subsequent reservations since the beginning of January has been encouraging however, four weeks is too short a time to consider revising our forecast for the full year.”

The Newcastle-based company said in December that half-year profits to January 31 were expected to rise 20% after better-than-expected reservations following the Government spending review.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said Bellway was seen as a “likely winner” despite general market nerves over the impact of austerity cuts on the sector. He said: “The group’s more prudent management coming in to this downturn has shielded it from the worst of the crisis, with the company now reaping the benefits over rivals, acquiring land at discounted levels and potentially cementing future profitability.”

Bellway, which was formed in 1946 and now employs around 1,400 people in the UK, said profit margins were benefiting as sales from cheaper recent land deals kicked in. The group, which reports interim results on March 30, added its forward order book stood at 2,343 homes – worth £402 million, up from £390 million a year earlier.

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