By Aby Jose Koilparambil
(Reuters) -UK homebuilder Bellway expects its sales rate to improve only in calendar 2025, its CEO said on Tuesday, after the company forecast about a one-third slump in annual output as affordability concerns drive homebuyers away.
Britain’s housing market has been battling a slowdown for much of this year as high mortgage rates dampen demand and consumers rein in spending amid a prolonged cost-of-living squeeze.
Bellway expects to build around 7,500 homes in the 2024 fiscal year ending July 31, down 31% from 10,945 units in the preceding year, with the guidance based on an average weekly private reservation rate per site of 0.46 homes achieved in fiscal 2023.
The company, which constructs everything from one-bedroom apartments to six-bedroom family homes and luxury penthouses, said overall sales rate per site in the first nine weeks of the new fiscal year had slowed to 0.38 units.
“I don’t think you will get an improved sales rate until calendar year 2025,” CEO Jason Honeyman said in an earnings presentation, adding that the builder could move towards a home-build target of 10,000 by 2026.
Bellway said it expected a 600-basis-point reduction in underlying operating margin in the current fiscal year which began Aug. 1, weighed by lower production, cost pressures and sales incentives to boost demand.
Peel Hunt analysts wrote in a note they expect the next six to 12 months to be difficult for Bellway, adding that the company was set to cut its dividend pay sharply.
The Newcastle-based firm expected the overall average selling price to be around 295,000 pounds ($359,163) in the 2024 fiscal year, down from 310,306 pounds a year ago, partly hurt by a higher proportion of social housing units.
Its underlying pre-tax profit for the year ended July 31 came in at 532.6 million pounds, down 18% year-on-year. Analysts, on average, were expecting a profit of 533.4 million pounds, according to LSEG data.
($1 = 0.8214 pounds)
(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Sherry Jacob-Phillips and Bernadette Baum)