09 February 2023
If you are covering Bellway’s latest results, please see the following comment from Oli Creasey, equity research analyst at Quilter Cheviot:
“Bellway issued a brief trading statement this morning, covering the six months to the end of January. Like other UK housebuilders, the company has reported a material slowdown in reservation rates, which were down -32% year-on-year overall, and -60% during the fourth quarter of 2022. That is unsurprising, and largely in line with the experiences of other companies in the sector, who like Bellway have pointed to higher mortgage costs and the end of Help to Buy as factors that have impacted sales rates.
“However, Bellway note that green shoots may already be sprouting, with a slight increase in the reservation rate in January (though still down -45% vs last year). Importantly, the rate was observed to improve each week through January, which may partly be a seasonal impact, but also reflects improving financial conditions. Despite the recent drop in reservation rates, management remain bullish on full year volumes, which they have guided to 11,000 homes, only down -2% vs last year. Likewise, while the company does indicate that selling prices will moderate in the next six months, the expectation is that this will be largely a result of a change in proportions in the social vs private sales channels, rather than material changes in underlying house prices.”
