Housebuilder Bellway has joined other firms in calling for government intervention to bolster the struggling housing market, urging a reduction in stamp duty to address affordability issues and stimulate demand. The FTSE 250-listed company cited a prolonged period of softer customer demand, compounded by rising build costs and increased mortgage rates, as key challenges impacting the near-term outlook.
Bellway's Chief Executive Jason Honeyman specifically requested an "immediate reduction" in the property tax, stating it would help ease affordability constraints for buyers. He also advocated for a government-backed deposit support scheme for first-time buyers, which he believes would foster economic growth and expedite the construction of new homes.
The company anticipates its annual underlying operating profit will be around £320 million, positioning it at the lower end of its forecast range when full-year results are announced in October. Bellway shares have experienced a decline, slipping 1.5 percent to 2,068 pence on Thursday, and have fallen 24.5 percent year-to-date.
The housebuilder reported an initial slump in demand last autumn, attributing it to uncertainty surrounding the government's budget. Subsequently, rising oil and gas prices, following geopolitical events, have contributed to increased mortgage rates, further impacting home affordability. Simultaneously, the cost of construction materials, fuel, and transportation has risen, increasing building expenses.
Despite the challenging market conditions, Bellway reported a 10.8 percent increase in total housing completions to 9,695 for the year ending July 31, exceeding expectations. The company stated it continues to maintain strict cost controls and is focused on monetizing its strategic land bank, which comprises approximately 48,000 plots. An additional 8,578 plots have been contracted for purchase at a cost of £505 million in high-demand areas.
Bellway concluded the fiscal year with net cash of £157.7 million, a significant increase from £41.8 million in the previous year. However, the adjusted operating margin saw a decrease from 11 percent to 10.5 percent, attributed to sales incentives and higher construction costs. The company's order book stands at 4,206 homes, a decrease from 5,307 the prior year. In response to financial performance and market conditions, Bellway announced a further £50 million share buyback, in addition to the £150 million initiated in October.
Other housebuilders, including Taylor Wimpey and Barratt Redrow, have also voiced concerns and urged the government to reduce stamp duty, which they identify as a contributing factor to the slowdown in sales. Andy Burnham has reportedly ruled out any changes to stamp duty in the upcoming Autumn Budget.