Bellway said it expects to sell a record 10,000 new homes this year as it posted another rise in profits after continuing to benefit from rising prices and the Government’s Help to Buy.
The Newcastle-based housebuilder said it continued to be supported by a ‘robust’ housing market, propped up by low interest rates, the Government’s Help to Buy loan scheme and lower stamp duty for first-time buyers.
Bellway’s average selling price of homes rose by nearly £20,000, or 7.7 per cent, to £275,945 in the half year to the end of January. It also sold 4,741 homes in the period – 279 more than last year.
This helped push pre-tax profits 17 per cent higher to £288.7million in the six months, with revenues 15 per cent higher at £1.3billion.
Houses under construction on a new development (PA)
Given the double-digit rise in profits, Bellway decided to hike its dividend by 28 per cent to 48p per share from 37.5p in 2017.
Shares in the FTSE 250 firm rose 3 per cent, or 96p, to 3,146p in morning trading.
While the London housing market has proved a sticking point for some developers, Bellway sold 259 more homes at 560 for the half-year.
Looking ahead, Bellway expects volumes to pick up by around 600 homes at year-end, helping it reach an all-time high of 10,000 new homes per year.
It also expects its average selling price to rise further ‘in excess of £280,000’, but warned that ‘prevailing economic uncertainty’ meant it was ‘unable to increase production beyond the business plan levels’.
Fiona Cincotta, senior market analyst at City Index, said: ‘Government policy is clearly supporting the construction business as Bellway figures point to 39% of their buyers using it.
‘With the agreement of the Brexit transition deal, house builders could now find themselves on a more solid footing as the removal of some uncertainties could give buyers and sellers more confidence, boosting the market.’
British housebuilders have benefited from years of rising house prices and government incentives, although the sector has been criticised for not building enough affordable housing.
Last week another firm, Berkeley Group, announced it had no plans to increase its production of homes.
The FTSE 100 firm cited economic uncertainty, a decline in buy to let investment and increased planning red tape as the reason why in its latest trading update for the period from November 1 to February 28.