Housebuilder Bellway says buyer confidence has waned

By This Is Money
Updated: 05:38 EDT, 19 October 2010

Housebuilder Bellway does not expect a pick-up in sales before next spring as buyer confidence has waned.

Bellwether: 'We're not expecting to see any volume growth until selling season next spring'

Newcastle-based Bellway, which is the only major housebuilder paying a dividend to shareholders, said that while sales have picked up after a summer lull, levels are still below the same period 12 months ago.

Alistair Leitch, Bellway finance director, said: 'We expect to achieve as many sales this year as the last. We're not expecting to see any volume growth until the selling season next spring.'

Mr Leitch said confidence had been shaken ahead of the Government spending cuts, set to be revealed by Chancellor George Osborne tomorrow.

'Everyone is focusing on tomorrow's announcement on the spending review,' he said.

'We're not seeing prices fall or cancellations increase, we're just seeing people's confidence decrease, and confidence is the oxygen of demand.'

But Mr Leitch said the group was prepared for the tough economic climate with a forward order book of £397m, with some 3,000 homes committed for this year.

The warning came as Bellway posted pre-tax profits of £44.4m in the year to July 31, up from £29.8m the previous year.

The company will pay a final dividend of 6.7p per share, up from 6p a year earlier.

Tessa Guy, an analyst at Investec Securities, lowered the broker's pre-tax profit estimates for the current financial year by 20% to £55.8m following Bellway's gloomier picture for the autumn and the worsening outlook.

She said it appeared the 'autumn selling season never really happened' and Bellway's comments added to evidence of a deterioration in the housing market.

The group completed the sale of 4,595 homes in the year to July 31, nearly 5% up on the previous year, which were sold at an average price of £163,175, a 6% increase on a year earlier. This helped the group increase turnover by 12.4% to £768.3m.

Bellway said at the beginning of the year to July it upped its land buying, and spent a total £208m in the financial year.