Housebuilder makes 拢200m and is set to achieve forward sales target, despite market gloom

Housebuilder Bellway this week took a bullish view of the housing market despite recent negative industry surveys.

It emerged on Tuesday that the firm has already achieved forward sales and reservations for more than 50% of its 拢587m target for the financial year ended 31 July 2005.

Bellway鈥檚 good mood was boosted by its results for the year to 31 July 2004, hitting a pre-tax profit of more than 拢200m for the first time. Turnover rose to more than 拢1bn.

Bellway鈥檚 outlook for 2005 contrasted with recent industry surveys, including one published by the RICS on Tuesday, which have shown that most housebuilders are suffering from a slowdown that will continue next year.

The RICS said house values were falling at the steepest rate for nine years and the number of unsold properties had risen 8% over the past three months.

John Watson, Bellway鈥檚 chief executive, said: 鈥淚鈥檝e got the opposite problem to what the RICS is saying. I can鈥檛 get enough property to the market because of forward sales.鈥� Bellway has set a target of selling 10,000 a year by 2010.

Although Watson conceded that the market was softening, he said employment levels were such that he did not foresee a housing crash, as long as interest rates did not rise steeply in the next 12 months.

Pre-tax profit rose 21.4% to 拢205m, boosted by Bellway鈥檚 focus on lower to middle-value homes, which have been in more demand than luxury houses.

Watson said the average Bellway sale price of 拢161,400 was lower than its competitors, and that he did not want any division of the business to exceed an average sale price of 拢200,000.

Bellway is focusing on social housing, which should act as a further buffer to the slowdown in the private sector. It has started construction on a government housing renewal pathfinder scheme at Sefton in Liverpool, and has been selected as preferred bidder on another scheme in Solihull, West Midlands.

The board recommended a 25% increase in its total dividend of 25p a share. The company鈥檚 results were in line with expectations so shares remained little changed on Tuesday at 683p.