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Housebuilders sales grow as surging prices offset higher costs

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Construction companies Bellway and Crest Nicholson said trading has been buoyed by strong price growth (Gareth Fuller/PA) (PA Wire)
Construction companies Bellway and Crest Nicholson said trading has been buoyed by strong price growth (Gareth Fuller/PA) (PA Wire)

Housebuilders Bellway and Crest Nicholson have shrugged off concerns over a slowdown in the housing market as they told shareholders that demand is continuing to outpace supply.

The two property giants saw shares improve as they said price increases in the sector have helped to offset surging construction costs.

Both firms reported sales growth as demand remained resilient despite recent interest rate increases, which threaten to impact upon customer mortgages.

UK house prices have continued to grow this year, with average prices hitting a record high of £289,099 in May, following 10.5% annual growth, according to the Halifax.

Demand is strong, reservations are ahead of last year and our order book remains substantial

Jason Honeyman, Bellway

However, the lender said this did reflect a slight slowdown in price growth.

Bellway told investors that “ongoing positive price momentum continues to offset build cost inflation” on its developments.

It came as the housebuilder reported that the value of its order book increased by 27.3% to £2.4 billion at the start of June compared with £1.9 billion at the same period last year.

The group hailed “strong sales demand” over the four months to June 5, with an average of 253 reservations per week, compared with 239 a week over the same period in 2021.

“Demand is strong, reservations are ahead of last year and our order book remains substantial,” commented group chief executive Jason Honeyman.

“The positive sales market and the further investment we have made in land provides a strong platform to enable the group to continue its growth strategy in the years ahead.”

Rival Crest Nicholson also reported an increase in sales as it hailed positive momentum in the housing market despite wider pressures in the economy.

The listed firm revealed revenues grew by 12.3% to £364.3 million in the six months to April.

Crest Nicholson said it saw its average selling price grow by 2.8% to £409,000 over the period.

Home completions grew by 7.8% to 1,096 properties for the period, it added.

The group also posted a £52 million adjusted pre-tax profit but tumbled to a £52.5 million reported pre-tax loss for the period as a result of £105 million in exceptional costs, driven by money it will pay out as a result of the Government’s Building Safety Pledge.