Bellway to start building again – in the South

Housebuilder Bellway today said it expected turnover in the North West, Midlands and Yorkshire to remain weak for the remainder of the year.

The company, with a regional base in Hunt's Cross, Liverpool, saw more positive signs in the Southern areas of the UK and forecast improved sales there by the end of 2009. It has started seeking land to buy and expects to increase production in stronger areas.

"First time buyers continue to struggle to raise deposits and consequently access to the first step on the housing ladder remains difficult," Bellway said in an interim management statement.

"With entry to the mortgage market still restricted and lenders' valuation policies remaining inconsistent, cancellation rates are still running at historically high levels."

Net reservations since 1 February averaged 105 a week, on target for 4,200 homes sold this year.

However, this has been achieved through cash discounting, part exchange and shared equity.

The level of unsold completed stock units reduced from 1,000 at the end of January to 660 at 31 May. Bank debt currently stands at £111.3m and Bellway is within its committed facilities.

The statement continued: "The focus of the business is changing from primarily one of simple debt reduction to selectively increasing production in certain parts of the country where demand is strongest. In addition, the Group has instructed its land teams to begin acquiring land suitable for traditional two storey housing."

The current order book of reservations for completion after 31 July stands at £228m (£283m, 31 May 2008).

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