UK housebuilder cautious after 7% reservations drop

UK housebuilder Bellway today said reservations were 7% lower than a year ago after the credit crunch caused nervous consumers to put off house purchases.

Bellway, which employs 2,000 staff across 18 regional offices, warned the outcome for its financial year to July 31 would depend on conditions during the key spring selling season.

The company said in a trading statement: “Whilst the supply side of house building remains constrained by planning, product and construction starts, the demand side is now being affected by a lack of consumer confidence and the economy generally.”

Bellway's strong forward sales position should allow the company to deliver modest growth in sales volumes for the six months to January 31.

But since the middle of October – when Bellway reported a 6.4% rise in pre-tax profits to £234.8m (€326.2m) – reservations have fallen below last year’s level. The figure showed a 7% fall in the four months to the end of November.

Newcastle-based Bellway added: “The group believes that it can still deliver a small increase in volume supported by a rise in the number of outlets available in early 2008.”

The company has built more than 100,000 homes since it founded in 1946.

In the last financial year, Bellway said Yorkshire, the north west of England and the Midlands saw a tightening in demand, with the market increasingly turning to the use of incentives in order to maintain volumes.

The company’s divisions in Scotland, the north east of England and in and around London traded well during the period, it added in October.

Bellway said today: “The size of the current forward order book puts Bellway in a strong position but the final outcome for the year ending July 31 will have to be reviewed in light of conditions prevailing in spring 2008.”