• Issue 39

  • Aug 2018

The Source

Housebuilder News

Bellway Breaks Records

In a recent statement, Bellway has announced that the company has completed the sale of more than 10,000 homes for the first time in its history.

The trading update for the year ending 31st July 2018 reported an increase of 6.9% on the 2017 figure, with sales reaching 10,307 new homes.

Also reaching a new high, the average selling price of homes rose by 9.4% to £284,900, as too did the proportion of private completions, increasing to 80% of the total (2017 – 78%).

During this financial period, Bellway’s average reservations increased 7% to 200 per week and after “particularly strong” trading in this first half, the sales rate since 1st February totalled 222 reservations per week, a climb of 6.2% against the comparative period last year.

The company also saw “substantial” revenue growth of 16% to almost £3 billion. Bellway anticipate an operating margin for the full year of approximately 22% (against last year’s 22.3%) resulting in another year of significant earnings growth. While growing volumes, the company has also maintained a “sizeable” forward order book, consisting of 4,841 homes, compared to 4,749 homes in 2017.

Jason Honeyman, Bellway’s CEO, said: “Bellway has responded positively to the favourable market conditions, completing the sale of over 10,000 new homes for the first time in its history, whilst retaining a clear focus on quality and customer care.

“Trading has been robust and notwithstanding wider political and economic uncertainty in the UK, Bellway has both the financial and operational strength to respond opportunistically to future changes in market conditions.”

Positive Results for Persimmon

Following last month’s update ahead of their half year results, Persimmon has now confirmed “strong results” for the first six months of 2018. Pre-tax profits rose 13% against their half year in 2017 to £516.3 million, whilst housing sales volumes increased 3.6% to 8,072 new home legal completions. Average selling price also went up 1.2% to £215,813.

The company said that trading through the first half was robust with total group revenue rising 5% to £1.84 billion, whilst Persimmon’s underlying new housing operating margin increased 29.7%.

In line with 2017 figures, average weekly private sales rate per site levelled at 0.78 from an average of around 375 sites and Persimmon reported current forward sales of £2.120 billion, 6% ahead year-on-year.

The group expects to open around 100 new sales outlets through the second half of the year and this focus on sustainable growth saw the company opening their 30th regional operation, in Suffolk, which in the first half delivered 186 new homes.

Jeff Fairburn, Persimmon’s group CEO, said: “These strong results reflect the continued successful delivery of the group’s long term strategy and our commitment to meeting customer demand in each of our 30 regional markets across the UK.

“We have continued to experience good levels of customer interest in our housing development sites as we trade through the quieter summer season. Customers are continuing to benefit from a competitive mortgage market and confidence remains resilient based on healthy employment trends and low interest rates.”

The company also commented that government policy would need to play a pivotal part in helping develop future market conditions “that will allow the industry to continue to increase the delivery of newly built homes”.

Taylor Wimpey Still On Track Despite Weather Setback

Taylor Wimpey have reported that the poor weather conditions experienced earlier this year have affected their first half completions, falling 3.2% against the equivalent period in 2017.

Completions by the volume housebuilder totalled 6,367 (against the 6,580 of H1 2017) and this reduction also had a bearing on total revenue, which dropped 0.4% to £1,719.8 million.

The company said: “This means we expect 2018 to be more second half weighted than normal. The catch up in construction has progressed well and we remain on track to deliver in line with our FY 2018 guidance” and added that pre-tax profit rose 46.8% to £301 million.

Also, private average selling prices for H1 2018 rose 2.8% to £295,000, driven by their “focus on better quality locations”, whilst net private reservation rate for the first half was 0.83 homes per outlet per week compared to 0.87 in H1 2017.

With an order book value, representing 9,612 homes (2017: 9,141), totalling £2,269 million, this figure is a steady increase against 2017’s £2,224 million) and Taylor Wimpey added they were around 87% forward sold for private completions for 2018. The company also said that, excluding H1 2017, this year’s first half was the “strongest H1 sales rate recorded for Taylor Wimpey”.

Pete Redfern, Taylor Wimpey’s CEO, said: “As employment prospects remain positive and mortgage availability is good, customer demand for our homes has been strong in spite of some wider macroeconomic uncertainty. We have been very pleased to see further improvement in our customer satisfaction scores which is the result of our increased investment in this area over the last three years.

“With a strong order book in place, we are confident in our prospects for the remainder of the year and looking further ahead.  We remain on track to deliver the board’s expectations for 2018.”

Help to Buy Helps Quarter of a Million People  

According to the Home Builders Federation (HBF), the government’s Help to Buy equity loan scheme has helped around a quarter of a million people onto the property ladder since its launch in 2013.

This figure is based on an average first-time buyer household size of 1.8 people and estimates that the initiative has allowed 246,000 individuals to realise home ownership.

However, government statistics state that 48,244 households purchased a home via the Help to Buy scheme in the past year, 39,112 of which were first time buyers. This figure takes the total number of homes purchased through the scheme since its inception to 169,102, with 81% of these households being first time buyers.

The statistics also reveal that 40% of all homes purchased with Help to Buy have been bought for less than £200,000 and in fact, 75% of buyers paid less than £350,000. The median purchase price in Q1 2018 (excluding London) via the scheme stands at £250,000.

HBF believes that the Help to Buy scheme has accomplished the three key objectives set at its launch:

  • improving access to low deposit mortgages for creditworthy households;
  • increasing supply of new housing;
  • making a contribution to the economy

According to the HBF, the initiative had been more successful than any previous similar scheme in regards to the first aim, adding that as the scheme is exclusive to the new build market, Help to Buy has helped to increase net housing supply by 74% since 2013.

The initiative’s contribution to the economy was strengthened further in a recent report by Lichfields, which claimed that each new home supports 3.1 jobs, “meaning that the 48,244 homes bought with Help to Buy last year helped to sustain an estimated 149,500 jobs on sites, in offices and through the supply chain”.

HBF’s Executive Chairman, Stewart Baseley, said: “The phenomenal increases in supply we have seen over the past five years would not have been possible without a scheme that has turned the dream of home ownership into a reality for so many.

“As the current expiry date for the scheme fast approaches, we are keen to continue working with policymakers to ensure that these benefits are sustained in some way beyond 2021 and bring much needed clarity for builders.”