UK: Help to buy boost Bellway orders
- Credit: Archant
Housebuilder Bellway said the Government’s Help to Buy scheme has helped drive a better-than-expected surge in demand as its order book jumped by more than 50%.
The Newcastle-based builder said government incentive schemes have boosted consumer confidence, sending visitors flocking to its sites and lifting reservations 27%.
Bellway’s revenues for the year to the end of July rose 12% to around £1.1billion, with profit margins also improving.
It said “resilience in consumer demand” lifted its order book of new homes 54% to £679.5million from £441.2m a year earlier, giving it “optimism for future volume growth”.
“The new homes market has benefitted from improving consumer confidence throughout the year, having been supported by government schemes,” the group said.
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The Help to Buy equity programme was launched in April, offering loans to give people the chance to buy a new-build home with a deposit of just 5%.
It will be expanded to offer mortgage guarantees next year - where the State takes on the risk of default by borrowers by guaranteeing a proportion of a home loan.
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The NewBuy incentive also allows people to buy a new home with a small deposit.
Another state scheme, Funding for Lending, incentivises banks and building societies to lend more in return for discounted loans and has been credited with improving mortgage availability and reducing rates.
Figures this week showed house prices increased at their fastest pace in almost three years in July.
Mortgage lender Halifax said the 4.6% annual rise was the strongest uplift seen since August 2010 as greater consumer confidence boosted demand.
Bellway said it sold 5,652 homes during the year, up 8.2% on 5,226 a year earlier. Average prices rose 3% to £193,000.
It added there is some evidence house prices, particularly in the south of England, are “modestly” ahead of expectations, although this has not yet filtered through to average selling prices.
Profit margins improved by two percentage points to around 13.4% during the year.
The builder said reservations are running at 128 per week, compared with 101 per week a year earlier, with all regions benefiting from the improved market.
It recently opened two new divisions in Manchester and the Thames Valley to give it 15 divisions.
Bellway spent £300m on land during the year, but said it ended up with bank debt of just £6m.