For the second time this year, Newcastle upon Tyne-based developer Bellway (BWY) has lifted investor spirits in the moribund housebuilding sector with a positive trading update.

Shares in most housebuilders have struggled this year, after a difficult 2024, as interest rates have fallen more slowly than expected and consumer confidence has wilted in the face of increasing prices and job insecurity.

For the year to the end of July, Bellway reported a 14.3% increase in housing completions to 8,749 units and an £8,000 increase in average selling prices to £316,000, both metrics topping its original guidance.

Housing revenue overall increased by 17% to more than £2.76 billion, with an underlying operating margin of around 11% against 10% the previous year.

The private reservation rate, a measure closely watched by investors and analysts as a sign of future sales, was nearly 12% higher than the previous year at 0.57 units per sales outlet per week, including bulk sales, while excluding bulk sales the rate increased by 6% to 0.52 units per outlet per week.

That took the forward order book at the end of July to 5,307 homes against 5,144 a year ago with a value of £1.52 billion against £1.41 billion, although the firm did say it had seen ‘softer’ trading in the final quarter.

Encouragingly for margins, build-cost inflation was in the low single digits throughout the year and the company said there were good levels of building materials and subcontractor availability which should keep input prices steady.

Overall, Bellway ‘delivered a solid performance despite ongoing headwinds for our industry,’ said chief executive Jason Honeyman.

‘There was good growth in volume output and an improvement in underlying margin which are set to drive a strong increase in profits for FY25. We have entered the new financial year with a healthy forward order book and outlet opening programme and, if market conditions remain stable, we are well-positioned to deliver further growth in FY26,’ continued Honeyman.

Investors will be hoping for an equally upbeat assessment from the rest of the housebuilders when they report earnings in the coming weeks.

As Shares went to press, York-based affordable home developer Persimmon (PSN) was due to publish its first-half trading update.

As with Bellway, the market’s focus will be on net private reservations and the size of the forward order book, as well as comments on the outlook for the rest of this year, where analysts have penciled in an improvement in profits and margins.

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