Home sales up 5% at Bellway

Housebuilder Bellway said completed home sales rose by 5% in the six months to 31 January 2012 with operating margins poised to reach double digits.

During the six-month period the Newcastle upon Tyne developer said it completed the sale of 2,455 homes compared to 2,332 in 2011, driven by private sales, which have risen by 15%.

The average selling price of all completions increased by 8.7% to around £183,000 and Bellway expects that the average selling price to grow further, albeit at a slower rate, during the remainder of the financial year.

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Operating margin at the firm continue to improve and is set to reach double digits for the six months to 31 January compared to 6.9% in 2011.

"This rate of improvement has now slowed and although the operating margin should continue to grow, it will do so at a more sustainable pace," the group explained in a company statement.

Just over £100m was spent on land and land creditors in the period and net debt at the end of January is around £12m. The group retains facilities of £300m, which expire in tranches up to November 2016.

Reservations since August have averaged around 89 per week from 205 sites compared to 80 per week from 185 sites last year.

Whilst incentives are used widely, this increase has been achieved despite reducing the use of shared equity as an incentive to only 5% of reservations taken, the group said.

Bellway embarks on the second half of the year with an order book of £423m, up from £402m in 2011, having already reserved or legally completed 83% of this year's target.

With the spring selling season about to start, Bellway notes that last year provides a challenging comparison in terms of reservations.

"Nevertheless, with visitor levels up by around 20% since the beginning of January and with the Government's new `Mortgage Indemnity Guarantee' (MIG) scheme about to be launched, early indications are that the housing market remains resilient. To what extent this resilience is sustainable can be better assessed at the end of March," it said.