Company in the news: Bellway

Britain's house builders have been riding the wave of another boom. Low interest rates and huge amounts of government support, such as the Help-to-Buy scheme have been kind to them over the last couple of years. But now the housing market is starting to cool.

Last week, Bellway (LSE: BWY)said that conditions were returning to more normal patterns. The company is doing well, with reservations slightly ahead of this time last year, and it's set for another good year of increased profits.

So how much better can things get for companies like Bellway? The company reckons its profit margins will be around 20% in 2015, which would be more than it was able to achieve during the last boom a decade ago.

Try 6 free issues of MoneyWeek today

Get unparalleled financial insight, analysis and expert opinion you can profit from.

Start your trial

Sign up for MoneyWeek’s free twice-daily newsletter.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Sign up

Its share price is at similarly lofty levels. At 1,837p,it trades on nearly 1.7 times net asset value, which is very expensive compared to the past 20 years.

Profits could stay high for a while yet given that Bellway has been buying land at good prices. But one day, the housing market will head south again Bellway's shares don't reflect that risk.

Verdict: take profits