Bellway boosted by Help to Buy
Bellway's share price was up two per cent this morning after the company said its sales grew by seven per cent, with reservations boosted by the government's Help to Buy scheme.
The figures
The housebuilder announced that its reservation rate was 176 per week for the 18 weeks from 1 August to 4 December, up from 165 per week during the same period last year.
The company has spent £263m on land and land creditors, having spent £235m last year.
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Home completions for the year to 31 July are expected to increase by five per cent and Bellway's board has recommended a final dividend of 74p per share, as compared to 52p in 2015.
Bellway's cancellation rate increased from 10 per cent in 2015 to 11 per cent this year.
Why it's interesting
The Help to Buy initiative has been helping Bellway's sales, as the group said today that the loan scheme was used in 37 per cent of its off-plan sales, up from 29 per cent during the same period last year.
In addition, the reduction in the Bank of England's base rate has helped keep the mortgage market competitive, Bellway said.
What Bellway said
Ted Ayres, Bellway's chief executive, said: "The group has made an encouraging start to the financial year and customer demand for new homes continues to be robust.
Read more: House prices are on course to fall below £300,000 in December
"The strength of the underlying housing market supports further growth and this, together with Bellway's strong balance sheet and significant operational capacity, ensures that the group is well positioned to continue its disciplined growth strategy."
What analysts said
Russ Mould, investment director at AJ Bell, said: “Housebuilder Bellway continues to see robust demand for new homes and the group is on course to deliver volume growth of around five per cent.
"Bellway has invested significantly in high quality land in recent years and work in progress and has grown its operational structure to 19 divisions, which have a capacity to deliver around 11,000 new homes a year. The investment has been achieved while maintaining a strong balance sheet and this, together with the supportive market fundamentals, ensures the group is well placed to continue its long term growth strategy."