(Reuters) – UK homebuilder Bellway on Tuesday said it was still on track to deliver 10% annual output growth, helped by persistently strong demand, staving off concerns that a housing market boom had started to fade amid a growing cost-of-living squeeze.
Cheap loans and government support measures have propped up the under-supplied UK housing market during the pandemic, although the demand environment faces fresh challenges from potential rise in mortgage rates and deepening inflationary pressures on the consumer.
Last week, the Bank of England raised interest rates for the second time in two months, with nearly half its policymakers asking for a bigger increase to contain rampant price pressures, a policy move that could indirectly weaken demand in the housing market.
“Notwithstanding the recent, modest rises in interest rates and cost-of-living inflationary pressures, our mid-market product remains affordable in a historical context,” Chief Executive Officer Jason Honeyman said in a trading update.
Bellway said it continues to expect completion of 11,100 homes for the full year to July 31, 2022, and around 12,200 homes in financial year 2023.
The FTSE mid-cap company, which builds houses ranging from one-bedroom apartments to six-bedroom family homes and luxury penthouses, said its order book stood at 1.94 billion pounds ($2.62 billion) as of Jan. 31, while average selling price rose 2.8% to 311,800 pounds.
Bellway’s bigger rivals Persimmon and Taylor Wimpey last month forecast strong demand, while smaller firms MJ Gleeson and Vistry reported healthy trading on robust demand. Countryside Properties unexpectedly reported a weak quarter.
($1 = 0.7395 pounds)
(Reporting by Aby Jose Koilparambil in Bengaluru; editing by Milla Nissi)
