- Customer confidence increasing
- Outlook for volume and prices raised
- Shares rise to six-month high
Shares in homebuilders were up after Bellway (BWY) posted a positive trading update for the four months to the beginning of June.
Bellway shares themselves gained 136p or 5% to a new six-month high of £28.10, while shares in Persimmon (PSN) rose 4%, Barratt Redrow (BTRW) rose 3% and Taylor Wimpey (TW.) rose 2%.
ROBUST SPRING TRADING
The Newcastle-upon-Tyne builder, whose financial year ends in July, said it had seen ‘robust trading’ over the Spring selling season with an increase in customer confidence and reservation rates compared to the six months to January.
The private reservation rate excluding bulk sales was flat on last year at 0.61 units per sales outlet per week, while including bulk sales it increased 8% from 0.62 to 0.67 units.
As a result, the forward order book increased by just under 8% to 5,759 homes at the start of this month against 5,346 a year ago.
The firm lifted its annual volume forecast to between 8,600 and 8,700 homes, against 7,654 completions in the year to July 2024, while thanks to a better product mix average selling prices are expected to be around £315,000, up from a previous estimate of £310,000.
Chief executive Jason Honeyman described the company’s performance as ‘solid’ and said it was ‘on track to deliver strong growth in volume output and profits in the full financial year’.
EXPERT VIEW
‘Bellway has proved it is able to weather this volatile market effectively, with improved reservation rates, a healthy order book and upgrades to margin and volume guidance in its latest update,’ commented Julie Palmer, partner at business advisory firm Begbies Traynor (BEG:AIM).
‘Encouraging signs of improving buyer confidence and easing interest rate expectations offer some further grounds for optimism, but challenges remain.
‘Lingering economic uncertainty, persistent build cost inflation and tighter mortgage affordability continue to weigh on the sector, meaning Bellway – like other housebuilders – will be hoping for clarity on further rate cuts to help unlock demand.’
