Bellway's sales benefit from low interest rates and Help to Buy

13th Dec 2013 10:24

- Active outlets and reservations rise- Low borrowing costs and Help to Buy boost sales- Average selling price of homes increase- Total dividend raised 50 per centUK residential property company Bellway said it has continued to experience strong demand for new homes, supported by low interest rates and government schemes. In a trading update for the period from August 1st to November 30th, the group said the average number of active outlets has increased by 5% to 224.Reservations, net of cancellations, have risen to an average of 144 per week, up 43% on last year.The firm said the government's Help to Buy scheme has helped improve accessibility of mortgages and boost the housing market. The scheme was used in 31% of reservations. Low borrowing costs, currently set at 0.5% by the Bank of England, have also helped results. "These favourable conditions, together with a strong brought forward order book at July 31st, should mean that the rate of increase in legal completions will be more heavily weighted towards the first half of the year, with the board anticipating a rise of over 20% for the six months ending January 31st 2014," Bellway added. The average selling price continued to rise, driven by high value apartments in London. The company expects that average selling price will increase to around £205,000 in the first six months of the financial year. Margins are tipped to exceed 15% in the year to the end of July 2014.In an effort to meet growing demand, the group has spent £121m on land and land creditors and has agreed heads of terms on a further 4,000 plots with a value of £220m.At the end of November, Bellway had net cash of £74m, reflecting in part a higher number of legal completions in the first 18 weeks of the financial year. The business has subsequently renewed a £25m rolling credit facility, on favourable terms, thereby maintaining bank facilities of £300m."This strong cash position, combined with a strong pipeline of future landacquisitions, should ensure that the group is well placed to deliver further volume growth," Bellway said. A final dividend of 21p per ordinary share was recommended, up from last year's 14p, bringing the total dividend for the year to 30p, a 50% increase on the prior year.Shares rose 2.12% to 1,445p at 11:05 on Friday.RD