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Bellway has abandoned plans to increase its output by nearly 10% this year in the face of the deepening market uncertainty heightened by the recent mini budget fiasco.

Announcing full year results for the year to July 2022, in which it reported pre-tax profit sharply down as a result of a 拢346m provision for fire safety repairs, the Newcastle-based, listed housebuilder said it now expected volume for the current financial year to be 鈥渟imilar鈥� to the 2022 level.

As recently as August, Bellway had said it planned to grow output from the 11,198 homes built in the 2022 financial year to at least 12,200 homes in the 2023 accounts.

In a statement accompanying the results, it said: 鈥淪upported by our recent investment in land and work-in-progress, the Group retains the operational capacity to grow output up to 12,200 homes.

鈥淥utput is, however, expected to be more moderate, given the uncertain economic backdrop. [鈥�] given this, the Board currently expects volume output to be similar to the prior year.鈥�

The firm said that reservations had 鈥渕oderated鈥� in recent weeks 鈥� though it only provided data up until 2 October, just 10 days after the mini budget 鈥� with weekly reservations of 191 per week in the nine weeks since the end of the financial year, 12.4% down on the same period in 2021.

This comes after Barratt last week said its private sales per site in the period since the start of September had fallen 47% on the previous year, though Bellway did not reveal what its sales rate per site was, or separate out affordable housing sales from private reservations.

The firm said the final outcome for volume was dependent on the spring and autumn selling seasons, and that the business would 鈥減rioritise the high standard of our product, margin, quality of profit and value creation鈥� in deciding how to respond to market conditions.

It said there was also a 鈥渨ider鈥� range of outcomes for profitability that the previous year.

>> See also Housebuilders share prices rise as Hunt delivers emergency statement

>> See also What are housebuilding鈥檚 prospects in the wake of the mini budget?

The statement comes amid fears of a wider housing market slowdown amid rising interest rates and fears over a deepening economic crisis, with Capital Economics last week predicting housing starts will drop by 38% next year.

Its forecasts came as Bellway reported pre tax profit of 拢304m, down 37%, on record turnover of 拢3.54bn, up 13%. The firm鈥檚 underlying pre-tax profit, which discounted the impact of the 拢346m fire safety remediation work charge, was 拢650m, up 23%.

The firm said it had net cash of 拢245m but had experienced build cost inflation of around 10% over the year, which saw no sign of abating.

Chief executive Jason Honeyman said it had delivered 鈥渁nother strong performance鈥� and that it retained its ambition to grow to an output of as many as 16,000 homes per year in the medium term. However, it expects to rein in land buying activity in the year ahead.

He said: 鈥淥ur strengthened land bank and resilient balance sheet provide a platform for long-term growth and, importantly, during a period of economic uncertainty, they enable the Group to take a more cautious approach to land investment in the year ahead.

鈥淥ur long-term model is our strength and is supported by an underlying demand for new homes. Bellway鈥檚 growth will continue to be disciplined as we maintain a clear focus on the high standard of our product, margin, quality of profit and value creation.鈥�

Shane Carberry, equity analyst at Goodbody, said Bellway鈥檚 trading update highlighted the 鈥渃hallenging backdrop housebuilders are facing, with softening demand and cost inflation not abating鈥�. 

He added: 鈥淲hile [chancellor] Jeremy Hunt鈥檚 intervention [yestrday] provides some cause for optimism for the sector, it won鈥檛 stop demand for housing from cooling. Indeed the sector is faced with many issues and there will undoubtedly be more challenges ahead as the housing market struggles with affordability issues in the context of the cost of living crisis.鈥�

Bellway shares fell 1% in early trading.