UK Housebuilder Bellway Profit Surges 73 Percent on Higher Prices

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UK Housebuilder Bellway Profit Surges 73 Percent on Higher PricesUK housebuilder Bellway Plc saw its first-half pretax profit surge 73 percent as home prices rose, which prompted the company to announce that it forecasts sales volumes to climb as much as 20 percent this fiscal year.

The company said the mean selling price for a house grew to 212,071 pounds ($350,570) in the six months ended January 31, up from 187,426 a year ago. This pushed its first-half pretax profit to 103.8 million, according to Wall Street Journal.

The British housing market has been recovering gradually, helped by the government “Help to Buy” program to help homebuyers to raise deposits for houses and low interest rates. Mortgage firm Halifax said that UK housing prices grew at the fastest pace in five years, igniting concerns it could overheat.

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Bellway Finance Director Keith Abey said the biggest reason for the higher average prices was the company’s bigger focus on London housing market, where homes average 55 percent higher than the rest of Britain.

The company sold 3,245 months in the fiscal half ended January, 25 percent more than it sold a year earlier. London’s market accounted for 25 percent of the total sales. Revenues grew to 701.1 million pounds ($1.16 billion). Operating margin rose 280 basis points to 15.6 percent.

The company also raised its full-year revenue growth forecast from 15 percent to 20 percent. It also revealed it had started the Spring season on a good note.

“We invested significantly in land over the past few years and as a result of that we’ve been able to react to the strength in the market,” Abey told Reuters.

The company’s stock surged 4.2 percent to 1,675 pence as of 1000GMT

To contact the reporter of this story; Jonathan Millet at john@forexminute.com