Housebuilder Bellway enjoys stamp duty boost but warns on unemployment

Housebuilder Bellway has seen a surge in completed houses as the company benefited from being allowed to continue operating during the various national lockdowns and Covid-19 restrictions.

But bosses warned the future remains uncertain with large rises in unemployment across the country likely to impact the sector.

The end of a stamp duty holiday and changes in the Help-to-Buy rules could also make it harder for prospective homeowners to get on the property ladder or for the housing market to grow.

Construction has continued throughout Covid-19 restrictions with demand holding up (Jonathan Brady / PA)

But the current market remains strong, with Bellway revealing it completed 5,565 new homes in the six months to the end of January – up 6.3% – compared with the same period a year ago.

There was also an increase in sales, with private reservations rates up 3.3% to 156 per week, and continued investment in land for new homes.

Across 54 sites, 8,848 plots have been identified and contracted – compared with 7,005 plots across 41 sites a year earlier.

House completions for the full year to the end of July are now expected to rise to 9,800 homes, compared with 7,522 a year ago, the company added. Profit margins are also likely to increase.

Jason Honeyman, chief executive, said: “While uncertainty remains in the wider economy, the underlying demand for good quality new homes remains robust and we have therefore made further, disciplined investment in attractive land opportunities.”

Shares rose 2.6% in early trading.

The housing market has stayed strong during the pandemic, helped by a stamp duty holiday, which ends in March, although there was greater demand last spring at the end of the first national lockdown.

Reservation rates slowed during November as the second national lockdown was imposed in England and new Help-to-Buy rules led to new applicants holding off. Rates recovered in the first month of the new year.

Construction sites remain open and bosses said there was “no discernible effect on the supply chain as a result of the UK’s new trading arrangements with the EU”.

This is at odds to recent sector-wide data which shows delays hitting the industry, although many businesses stockpiled supplies ahead of the Brexit deadlines.

Revenues rose 12% to £1.7 billion in the six months to the end of January. The average selling price was also up by 5.8% to around £303,200 due to a greater proportion of private housing completions – making up 78% of the total, compared with 77% last year.

However, the company said the rise in average prices is expected to drop back as higher value home sales were prioritised in advance of the change in the Help-to-Buy price caps, which become effective from April.

Looking forward, the business said: “There remains uncertainty in the wider economy, with the ongoing threat of Covid-19 presenting a risk of future disruption to operations and, if employment conditions worsen, customer demand.

“In addition, the end of the stamp duty holiday and the changes in the Help-to-Buy rules will make it more difficult for some customers to achieve the necessary deposit requirements to purchase a new home

“Nevertheless, the rollout of the Covid-19 vaccine provides some optimism and there remains an underlying requirement for new homes in the UK, with Government support for the housing market to remain open during the current ‘lockdown’ restrictions.”