Bellway sees demand boost from government's Help to Buy scheme

7th Jun 2013 07:30

UK property developer Bellway has said that it has made an 'encouraging' start to its second half as it is seeing strong demand for new homes. The FTSE 250 company said that reservations averaged 160 per week between the start of February and the end of May, up an impressive 31% with the same period last year, helped by the launch of the government's contentious 'Help to Buy' scheme.Help to Buy, which was launched by Chancellor George Osborne on April 1st, provides lenders with a guarantee of up to 20% of a mortgage to help potential homebuyers with deposits for new houses. Bellway's previous restriction on the use of shared-equity incentives has now been lifted, the company said, which has seen Help to Buy used in 360 of its reservations."Wider accessibility to affordable, higher loan-to-value mortgages has led to visitor numbers and reservations being ahead of expectations and these have been further enhanced by an increase in the number of active sales outlets," the firm said.The company said that the average selling price of reservations has increased by 5.0% year-on-year to £200,300 due to changes in product mix as well as higher-than-expected prices on new sites, especially in the south.Bellway said that it continues to invest in new land and is now operating from 223 sites (compared with 213 sites in 2012) and expects two-thirds of completions this financial year (ending July 31st) to arise rom land acquired since the downturn. This should help the company report a 200 basis-point improvement in the operating margin from 11.4% last year.The company raised its full-year growth target for the number of legal completions from 5.0% to 7.0%.The firm said: "The board is encouraged by the gradual improvement in market conditions and is hopeful that this will facilitate further organic growth through geographic expansion."The stock was up 2.36% at 1,346p in early trading on Friday.