THE chief executive of UK housebuilder Bellway has hailed Scotland as one of its most important trading territories after its average selling price grew by 20 per cent to around £190,000 north of the Border.
Bellway said around 600 of the record 7,752 homes it legally completed in the year ended July 31 were in Scotland, where its activity is largely based in Glasgow and Edinburgh.
Boss Ted Ayres highlighted the importance of its Scottish operation, where it is also active in Perth and Troon, as Bellway served up a bumper 44 per cent increase in pre-tax profits to £354.2 million.
Mr Ayres said: “The Scottish market is very, very important for Bellway at the moment and we are seeing good growth coming out of Scotland.
“Historically, we always had two divisions in Scotland. We have now only got the one, which is based at Hamilton but we will wait and see how the market progresses in Scotland.
"Who knows, we may extend further there.”
Mr Ayres noted the benefit continuing to be brought to the company by the Help to Buy scheme in England and Wales, which supported 27 per cent of Bellway’s legal completions last year.
This was down slightly on the 30 per cent it has seen since the scheme, which has been extended south of the Border until 2020, was introduced in 2013.
Mr Ayres expressed his hope that the Scottish Government will unveil fresh support for its own version of the scheme next month.
He said: “We are led to believe that they are talking about a further £195m in Scotland to extend the current Help to Buy scheme, and I think they are hoping that it will be ratified in the November spending review. That would be a welcome boost for Scotland because we have done incredibly well in boosting sales rates, not just at Bellway but at other housebuilders in Scotland.
“If we can get that bit of continuity coming out of the Scottish Government it is going to be great for Scotland.”
Mr Ayres noted that finding deposits worth at least five per cent of the cost of a new home remains a “big problem” for first-time buyers.
But, while he acknowledged that Help to Buy continues to be an “important selling tool” for the business, he said it is important the market is able to prosper without the stimulus by 2020.
He is optimistic that a marginal increase in the historically low base rate, such as by 0.25 per cent or 0.5 per cent, by the Bank of England would not have a major impact on sales.
He said the Mortgage Market Review, brought in last year to cap lending from mortgage providers at 4.5 times the salary level of borrowers and brought it stress tests for mortgage holders, should mean there is “not too much of a dampening effect if there is a small interest rate rise”.
Bellway saw turnover rise by 18.9 per cent to £1.76 billion from £1.48bn last year, with its average UK-wide selling price rising by five per cent to £223,821.
And Mr Ayres said Bellway had started its current financial year brightly, noting that it expects to achieve a further five per cent increase in average selling price this year to around £235,000 to £240,000. It has guided the City on a 10 per cent increase in the volumes.
Mr Ayres admitted a shortage of skilled labour is still the biggest challenge the sector faces, with the issue more pronounced in London than in trading divisions in Scotland and the north of England.
Bellway proposed an increase in total dividend to 77p, up from 52p last year.
Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers said: “The results are at the upper end of forecasts. A series of key metrics have risen to record levels, including build volumes and operating profit margin. “On the downside, constraints regarding the availability of labour remain, an increase in interest rates continues to lurk in the background, whilst a 60% plus increase in the share price over the last year raises some valuation concerns.
“For now, Bellway and the industry remain in a purple patch."
Shares in Bellway closed up 85p, or 3.6 per cent, at 2,455p.
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