Bellway says residential property market ‘robust’ as sales remain strong despite election and Brexit concerns
Housebuilder Bellway reported in Wednesday’s trading update that the residential property market remains ‘robust’ as buyers ignore uncertainty in the UK economy.
Property builders saw share prices drop last week as Theresa May failed to secure an overall majority.
However Bellway’s shares rose more than 4 per cent in morning trading today to 2,969p.
Residential property market ‘robust’ as Bellway says demand has not slowed despite election concerns.
The Newcastle-based group said sales demand in the four months to June was strong, with a 13 per cent upsurge in reservation rates to 221 per week.
Demand remains strong across all regions and has increased throughout Spring, ‘unabated by any uncertainty in the weeks preceding the recent General Election’, Bellway said.
It now expects home sales to grow 10 per cent in the full year as buyers continue to disregard tumultuous economic uncertainty and the Brexit vote.
Chief executive Ted Ayres said: ‘Robust market conditions, together with a clear operational focus, is enabling Bellway to continue increasing its contribution to the supply of much-needed new homes.’
‘We have made a significant investment in land and work in progress over a number of years and this, together with a strong balance sheet and substantial operational capacity for expansion, should ensure that Bellway is well positioned to deliver further volume growth, this year and beyond.’
Head of Research at Accendo Markets, Mike van Dulken commented this morning:
‘Bellway is the biggest FTSE350 gainer this morning, helping bigger peers to the top of the FTSE100.’
‘This comes after a trading statement highlighting strong sales, upgraded guidance and soothing rhetoric about robust demand for new homes across all regions despite political uncertainty.’
‘Today’s gains extend last week’s bounce and add yet more positive technical signals. The shares remain within a rising channel going back to late last summer which could yet usher them to 3100p or better.’
Bellway added that the housing market continues to be supported by low unemployment, good availability of affordable mortgages and the Government’s Help to Buy scheme.
The average price for its properties remains at £260,000 and the value of its forward order book of homes stands at £900 million, up from £846 million in the same period last year.
Bellway also said land investment was up, with 10,250 plots contracted, up from 8,600.
Digital Look, analysts’ consensus forecasts
2017E 2017E Dividend cover Historic
PE (x) Dividend yield (%) (x) Price/book (x) Barratt Develop. 10.0 x 6.90% 1.45 x 1.5 x Bellway 8.6 x 3.80% 3.02 x 1.8 x Berkeley Homes 7.4 x 6.10% 2.20 x 2.5 x Bovis 12.4 x 4.70% 1.73 x 1.2 x Countryside Properties 12.3 x 2.40% 3.34 x 2.4 x Crest Nicholson 8.8 x 5.80% 1.96 x 2.0 x Persimmon 11.1 x 5.30% 1.71 x 2.7 x Redrow 8.4 x 2.70% 4.47 x 2.0 x Taylor Wimpey 10.0 x 7.20% 1.39 x 2.1 x AVERAGE 9.9 x 5.00% 2.36 x 2.0 x