Bellway shrugs off Brexit uncertainty as it's boosted by London Help to Buy - but shares drop on house price report

Emma Haslett
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Bellway said demand remained strong (Source: Getty)

It seems reports of the death of the housing market are greatly exaggerated, after housebuilder Bellway reported the market continued to be "robust".

The figures

Completions were expected to rise 10 per cent in the full year to the end of July, while sales increased eight per cent to 196 per week , up from 182 per week in 2015.

Bellway said it had been boosted by the introduction of London Help to Buy at the beginning of February, with usage of the scheme rising to 14 per cent of reservations in the capital.

And it's planning ahead: the company said it had contracted to acquire 8,600 plots since 1 August, up from 5,950 during the same period last year, spending £606m, up from £500m. Meanwhile, its net bank debt fell from £191m at the end of last May to £161m this year.

But despite the strong figures, shares fell 2.7 per cent to 2,590p in early trading...

Why it's interesting

Everyone from George Osborne down has warned that Brexit may hit house prices - while an apocalyptic report from the Royal Institute of Chartered Surveyors (RICS) today suggested house prices are about to plummet (hence, presumably, that share price fall).

But Bellway's figures suggest the Brexocalypse may be some way off: not only did it say it had "not experienced any noticeable effect on trading" in the run-up to the EU referendum, but it added its average selling price will increase 10 per cent, pushing operating margins towards the 22 per cent mark.

"An Englishman's home remains his castle whether or not mainly Europe remains inside or outside of its moat," said Anthony Codling, equity analyst at Jefferies International.

"A robust trading update from Bellway today, no changes to estimates as full year guidance was broadly re-iterated, which once again shows that Brexit is not a huge issue for UK housebuilders."

Time to stop worrying, perhaps?

What Bellway said

Chief executive Ted Ayres said:

The continued positive trading environment, the availability of good quality land opportunities and disciplined investment in an expanding divisional structure are enabling Bellway to continue delivering ongoing volume growth. This strategy for growth, together with a focus on return on capital employed, should lead to another record performance in the year ending 31 July, resulting in further value creation for shareholders.

In short

Bellway's results suggest house buyers' appetites remain unaffected by Brexit concerns - despite warnings to the contrary.

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