This UK housebuilder will deliver 10,000 homes in 2018 – what’s its secret?

 

Major residential developer Bellway is on course to achieve its target of building 10,000 homes this year, despite facing difficulties including materials shortages and a lack of skilled workers. What’s the key to its success?

In spite of the recent negativity surrounding the country’s housing market, Newcastle-based Bellway has released an encouraging forecast for the year ahead stating that it expects to build 10,000 homes this year for the first time in its history, and has set the same target for the years ahead.

In the first half of the firm’s financial year to January, Bellway saw its property sales increase by 6.3% to 4,741, meaning it has between then and July to fulfil its target quota. Meanwhile, average selling prices for its homes increased by 7.7% in the first half to £275,945.

What are the issues?

The country’s housebuilding sector has faced a number of difficulties, including a shortage of building materials which was exacerbated in the wake of the Grenfell Tower disaster, which led to thousands of properties being overhauled and given alternative cladding. According to Jason Honeyman, COO of Bellway, some materials are taking three or four months to arrive, compared to the usual two to four weeks, and prices of bricks and roof tiles had gone up by 6-7%.

Further to this is the country’s lack of skilled builders at the moment, which is a problem that could be set to increase after Brexit as much of the workforce at the moment is made up of European workers.

Bellway’s strategy in the north

Robust customer demand, low interest rates and a fluid mortgage market are some of the factors which have boosted Bellway’s performance, as well as its past investment in land in order to achieve future growth.
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However, the primary key to the company’s success is its investment strategy. Although Bellway has some developments in London, including its flagship in Nine Elms in Battersea, it has tended to stay away from the capital in favour of the more provincial markets, with the north-west being a major focus as well as the Midlands, Scotland, and the commuter belt surrounding London.

By spreading its assets across the country, Bellway has managed to beat the slump seen in the capital and thrive elsewhere in the UK. While many buyers have been priced out of the London market, and others have sold their assets in the city after feeling that property there had perhaps come towards its ceiling price, investment away from the capital has thrived, and Bellway’s addition of 10,000 new homes this year will reflect this shift.

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This UK housebuilder will deliver 10,000 homes in 2018 – what’s its secret?

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