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Bellway warns of post-election housing market slowdown

15 Jun 10 Bellway has reported a drop in weekly sales rates and site visitor levels since the general election.

Bellway has reported a drop in weekly sales rates and site visitor levels since the general election.

The house builder attributed the slowdown to “uncertainty concerning anticipated government fiscal policy and spending reviews”, in an interim management statement covering the past 18 weeks.

However, Bellway said that overall, it had “maintained a sales rate broadly comparable with the same period last year, at 100 sales per week, from a similar number of outlets.

“Cancellation rates have remained stable at around 13%. The average selling price of reservations taken in the period is 10% ahead when compared with last year as a result of changes in mix, and an increasing exposure to the southern market.”

Bellway said it is confident that legal completions for the year ending 31 July 2010 will exceed those achieved last year by around 200 units. The firm has also taken 1,800 for 2010/11.

The statement continued: “The Board expects to deliver an operating margin in excess of 6.5% for the full year. Operating margins on current reservations have improved as a result of a strong focus on cost control and the commencement of recently acquired sites where gross margins are in excess of 20%.

“The Group's land teams continue to be active in the market, especially in the southern half of the country, albeit using a very disciplined approach with regard to margin, return on capital and achievable selling prices. To date, £151m has been unconditionally committed representing 2,475 plots, with heads of terms or conditional contracts agreed on a further 5,275 plots.”

Bellway warned: “Possible changes surrounding the planning system could pose new challenges to the business. Nevertheless, with a strong forward order book, net cash in the bank of £55m and expected future margin improvement, Bellway remains well positioned to continue to deliver earnings growth.”

The Group will announce a trading update for the financial year ending 31 July 2010 on 5 August.

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