Bellway shares slump after warning on growth
Shares in house builder Bellway slumped more than five per cent this morning as it warned of a slowdown in house price growth and climbing building costs.
Profit increased at the FTSE 250 firm but Bellway said it expected to deliver more moderate growth in the coming year.
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The developer reported a 3.4 per cent increase in profit before tax to £662.6m and a jump in revenue of 8.6 per cent to £3.21bn.
Bellway warned of “continued upward pressure” on build costs across the construction industry.
As demand for new homes in London declines, Bellway said it would shift investment to different regions of the UK.
“The group will continue to invest in financially viable locations in London where demand is strong, however the proportion of homes sold in London is likely to reduce in the foreseeable future, reflecting the positive availability of good quality land at attractive returns elsewhere in the country,” the company said in a statement.
A record number of new houses were constructed by the developer in the year to 31 July, after it built 10,892 homes, up 5.7 per cent on 2018.
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Help-to-buy was used in 36 per cent of house sales, a dip on the 39 per cent reported last year.
“A stalling of house prices, an increase in costs and a drop in Help-to-Buy volumes are all chipping away at the foundations of Bellway’s share price, as the house builder warns of margin pressure, to perhaps suggest that this is as good as it gets for the housebuilders,” Russ Mould, AJ Bell investment director, said.