Bellway and Crest Nicholson, two of Britain’s largest homebuilders, have said demand for new homes continues to outpace supply, pushing prices up and offsetting rising costs of building materials and energy.
Bellway posted strong sales during the four months from February 1 to June 5, when home reservations averaged 253 per week, compared to 239 in the same period last year.
The company expects to deliver more than 11,110 homes in the year to the end of July, up 10% from last year. Material shortages are starting to decrease, although bottlenecks remain at the regional level, especially bricks, blocks and tiles.
Jason Honeyman, Bellway CEO, said: “Demand is strong, reservations are higher than last year and our order book remains strong.
“Overall, construction cost inflation has been offset by house price increases and we expect this trend to continue.”
The average sale price of a home in Bellway is expected to exceed £305,000 this year.
There are some signs that the housing market is beginning to cool amid the deteriorating cost of living. Halifax, one of the largest mortgage lenders in the UK, reported last week that annual house price growth had slowed but remained in double digits.
Crest Nicholson said it built 1,096 homes in the six months to April 30, nearly 8% more than the same period last year. It made an adjusted profit before tax of £52.5 million, up from £36.1 million, and raised its full-year forecast to between £135 million and £140 million.
Peter Truscott, Crest’s CEO, said: “No one in the construction industry is immune from the current impact of input cost inflation. However, we manage to successfully offset this with selling price inflation in a market with strong demand and relatively low supply. Finally, the phasing out of Help to Buy, which is expected to end in April 2023, has had no measurable impact on our sales to date.”
He said Crest’s developments have often taken place in areas benefiting from the increase in working from home since the Covid-19 pandemic. “We are still seeing this reasoning being cited by customers in their reasons for moving home,” he added. The company opens three new divisions, the first two in Yorkshire and East Anglia.
Bellway said the government’s buying aid program was used by customers in 16% of home purchases, compared to 22% last year and 39% in 2020. It is mainly used for apartments in and around London, but Bellway has been building fewer blocks of flats in recent years. . At the same time, it said the availability of higher-value mortgages “improved gradually,” allowing those with smaller deposits to buy.
More than 35 homebuilders agreed in April to pay £2bn to repair unsafe cladding on high-rise buildings in England after the Grenfell Tower fire in 2017, but a further £3bn is needed. Michael Gove, the housing secretary, said the further £3bn would be raised through an extension of the construction safety levy, forcing the industry to pay for the repairs to buildings where the developer cannot be traced or forced to pay.
Bellway said it had set aside £187 million since 2017 to clad apartment buildings over 11 meters high, and in April pledged to cover buildings built since April 1992, which will cost a further £300 million. It has appointed a general manager to lead the new construction safety division to oversee the work.
Crest took a £48m charge last October related to cladding work on buildings taller than 18m, saying it acknowledged the “significant need for residents”. When it signed a pledge in April to carry out work on all buildings over 11 meters high, it cost a further £105 million. In regards to repairing “orphaned” tower blocks, Crest said it wouldn’t pay for buildings it didn’t build.