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Bellway urges caution over housebuilding

HOUSEBUILDER Bellway today said it remains cautious over the prospects for the housing market despite a modest pick-up in sales in first-half trading.

The Newcastle-based group sold 2,247 homes in the six months to the end of January, up 12 per cent on the previous year.

Its order book stood at £390 million or 2,506 homes, up from £296M and 2,173 homes for the same period the previous year but still down on two years ago.

Bellway has now sold or reserved 92% of its target for the full-year but says it expects trading conditions during the first half of 2010 to be "subdued" amid tight lending conditions.

"Historically there is always an uplift in weekly home reservations as the traditional spring selling season unfolds,” the company said in a statement.

"However, with mortgage providers continuing to require a high level of deposit, particularly for first-time buyers, we expect trading conditions during the first half of 2010 to be subdued relative to historic levels.”
The sector is still feeling the effects of the recession with prices remaining unchanged on last year at £156,000.

Bellway's operating margins also fell back during the period from 9.2 per cent to 6 per cent. However, it expects the margin for the full year to be at the higher end of the 6-7 per cent range.

Bellway added: "The board considers that the group is currently well positioned and is trading profitably with a high level of targeted output already secured and no borrowings. This should enable Bellway to take advantage of opportunities as and when they arise."

Imran Akram, an analyst at Collins Stewart said the update provides "more evidence of a strong UK housing market" despite finding the bearish outlook statement a little surprising.

Analysts at Panmure Gordon add: "The company is trading well, has a solid balance sheet and management have proved themselves to be ahead of the competition in their strategic thinking through the cycle.”

Yesterday Halifax said that house prices in the UK increased by 0.6 per cent during January, bringing the value of an average property to £169,777.

Its latest house price index shows that values are now up 3.6 per cent on an annual basis, with a 0.6 per cent during the first month of 2010.