Bellway expects 20% rise in profits

Housebuilder Bellway said it expects a 20% hike in interim profits as buyer confidence returned to the market following the Government spending review.

The Newcastle-based company said home reservations had increased since the announcement, although it confirmed they were still lower than a year ago.

Bellway previously said it had not seen the traditional autumn uplift as buyers delayed purchases until George Osborne announced his cuts on October 20.

But it said the decline in consumer confidence had now levelled out and added it was encouraged by people buying homes at a time that is normally slow for the housing market.

The number of sales secured for this financial year is 4% higher and the company expects the number of properties it sells in the six months to January 31 to be the same as last year.

With first time buyers struggling to get onto the property ladder, the company has moved into selling more expensive homes – its average sale price has increased 8% to £167,600.

The company said pre-tax profits could lift to £22.8 million in the first half, although it stressed the full-year result depends on the key spring trading period.

Shares in Bellway leapt 7% following the announcement.

The positive news from Bellway comes a week after fellow housebuilder Berkeley Group also posted an 18% rise in half-year pre-tax profits and a 20% surge in sales reservations.

Bellway plans to increase the rate at which it builds new homes and will have 200 sites for sale in the new year, up from 185 currently. The group’s land buyers bought 1,260 plots in the past four months and are actively looking for more.