Bellway eyes Scottish land as housing market starts to pick up

By DOMINIC JEFF
Published on 16/10/2012 09:35

HOUSEBUILDER Bellway is investing in land in Scotland in anticipation that a pick-up in the property market around London – that drove a 57 per cent jump in profits last year – will soon become more widespread.

• Bellway announces investment in land in Scotland

• Housebuilder expects pick-up in Scottish property market following spike in London

The company hiked its dividend by 60 per cent yesterday after reporting a pre-tax profit of £105.3 million, driven by the recovery in its southern divisions.

But chief executive John Watson told The Scotsman the firm was preparing to start work on sites north of the Border, including developments in Alloa, East Kilbride and Motherwell.

“Over time, markets around London won’t always be dominant and we need to ensure we keep investing in all our businesses,” he said. “We will continue to invest in Scotland. We like our Scottish business and that market will come back again.”

Newcastle-based Bellway sold 5,226 homes in the year to the end of July, up from 4,922 in the previous 12 months.

The average selling price also increased, from £175,613 to £186,648, helping turnover reach £1 billion, up from £886m in 2011.

Southern England accounted for 63 per cent of housing turnover in the year. An increase in the proportion of homes sold to private buyers rather than housing groups also helped improve selling prices and margins.

Since its launch in March, the NewBuy scheme, which uses government guarantees to provide up to 95 per cent loan-to-value mortgage products in England, has been helping more first-time buyers enter the housing market. Watson expects that a similar scheme launched more recently in Scotland will also prove beneficial.

He said the company expected to build on its performance with further growth in the current financial year, although the possibility that economic woes could start to impact employment levels – a key driver to housing – remained a risk.

He said the amount of land being released by planning authorities was still only just enough to match demand, but with small builders finding it hard to access funding, more of it was going to a handful of large, well-funded firms. Bellway has used only £40m of its £300m banking facilities.

Watson – who is due to become Bellway’s chairman in February and will be succeeded as chief executive by operations director Ted Ayres – said: “We are out there looking for land, trying to grow the business.”

The board is proposing to increase the final dividend from 8.8p to 14p per share. That would mean a total dividend for the year of 20p, an increase of 60 per cent on the previous year.