Bellway raises divi as it cashes in on deals for cheaper land

Housebuilder Bellway hiked its interim dividend by 62 per cent yesterday as improving sales of homes built on land bought at discounted prices following the financial crisis gave its half-year profits a boost.

The company completed sales of 2,455 homes in the six months ended 31 January, up from 2,332 in the same period the year before.

The average selling price of its homes has risen by 8.5 per cent to £182,753 in a year, although it said that was due to ongoing changes in its geographical and product mix rather than house price inflation.

The improved margins meant Bellway made pre-tax profits of £40.6 million in the half year, compared to £24m a year ago. The firm, which prides itself on having paid out to shareholders every year since 1979, upped its interim payment from 3.7p a share to 6p.

Chief executive John Watson said the company, which has few debts, wanted to balance investment in growth with increasing returns for shareholders.

“Demand is held back only, I think, because accessing a deposit is difficult,” he said.

He said Bellway would seek sales by buying land and opening more sites. The company is forecast to complete around 5,000 homes this year, and Watson said he expected it to keep growing output at a steady pace to around 6,500 homes in 2016.

That compares to the 7,000 homes Bellway built in 2007. Watson said the firm was not likely to get close to the £240m in profits made in that year, when it benefited from double digit house price inflation.

He said there were signs of a spring bounce in the Scottish market, as elsewhere in the UK, despite the fact Scotland is yet to see a scheme equivalent to the NewBuy initiative down south.