Bellway Reservations Rise on Cameron Homebuyer Program
Bellway Plc (BWY) said reservations in the past four months rose 31 percent from a year earlier as a government program to help buyers gave the U.K. homebuilder’s customers greater access to mortgages.
Bellway had 160 reservations a week during the period, the Newcastle, England-based company said today in a statement. The average selling price rose 5 percent to 200,300 pounds ($312,000), Bellway said.
Prime Minister David Cameron’s government introduced its Help to Buy program in March to help stimulate the economy, enabling buyers to pay a deposit as low as 5 percent of the property’s value by granting equity loans of as much as 20 percent. The loans were used in 360 transactions since it began in April, Bellway said. The International Monetary Fund said last month that granting the loans risked stoking demand and inflating prices.
“We’re only 8 weeks into Help to Buy and we don’t see rampant sales-price inflation,” Bellway Chief Executive Officer Ted Ayres said by telephone. “It has given a bit of a boost to sales and generally enhanced market sentiment, but will it solve all of the problems of the house-building industry? Well, no.”
About two thirds of home completions in the year ending July 31 will arise from land bought since the global financial crisis when real estate prices crashed. That would result in a 2 percentage point widening of operating margin, from 11.4 percent last year, Bellway said.
Bellway rose 2.2 percent to 1,344 pence in London trading, giving the company a market value of 1.64 billion pounds. The shares are up about 30 percent this year.
The company said it already met and annual target of increasing volumes by at least 5 percent, and it expects a 7 percent gain in the number of completions in the fiscal year through July 31.
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