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Bellway Sees Margin Exceeding 10% as It Increases House Prices

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Feb. 7 (Bloomberg) -- Bellway Plc, the U.K. homebuilder focused on homes for first-time buyers, said its profit margin may rise to more than 10 percent in the six months through January after selling more houses at higher prices.

The operating profit margin “is set to reach double digits” in the fiscal first half, the Newcastle, England-based company said in a statement today. Bellway reported a margin of 8.5 percent for the financial year ended July 31.

“This rate of improvement has now slowed,” the company said in the statement. “Although the operating margin should continue to grow, it will do so at a more sustainable pace.”

Homebuilders are boosting margins by building houses rather than apartments and building on land acquired after prices fell in the 2009 recession. The U.K. government will introduce a mortgage guarantee program later this year to enable borrowers to buy a new home with a down payment of as little as 5 percent of the property’s purchase price.

Bellway sold 2,455 homes in the period, up 5 percent from a year earlier. The average selling price increased by 8.7 percent to 183,000 pounds ($289,300). The company expects the growth rate to slow in the fiscal second half.

The company is scheduled to report fiscal first-half earnings on March 27.

To contact the reporter on this story: Simon Packard in London at packard@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net

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