Housebuilder says UK consumer confidence has returned amid cheaper mortgage rates

The housebuilder Bellway said consumer confidence in the UK had returned, with cheaper mortgage rates fuelling demand from buyers, as it exceeded its housebuilding targets for the past year.

The company completed 7,654 homes in the year to 31 July, down from 10,945 in 2023, but above its target of 7,500. The average selling price was £308,000, below last year’s £310,306 but also higher than expected. Revenue fell to £2.4bn from £3.4bn last year.

Customer confidence had improved, driven by an easing of mortgage interest rates and consumer price inflation, and an increase in wages, Bellway said. Trading patterns were less volatile than in 2023, when sharp changes in borrowing rates led to a rollercoaster in customer demand after the Liz Truss government’s disastrous mini-budget.

Jason Honeyman, the Bellway chief executive, said: “We are encouraged by the new government’s plans to increase the supply of new homes across the country and welcome its plans to reform the planning system.”

The Labour government wants to build 1.5m new homes over the coming five years, with a focus on affordable housing, and social housing in particular.

Bellway said it continued to use incentives to entice buyers on a targeted basis. Its forward order book has increased to 5,144 homes compared with 4,411 this time last year, with the value rising to £1.4bn from £1.2bn.

Shares in the FTSE-250 listed company gained more than 3%, while shares in other housebuilders including Barratt, Persimmon, Redrow and Crest Nicholson also rose.

Bellway’s upbeat results come a day after Persimmon raised its housebuilding forecasts for the year, saying it had been encouraged by the new Labour government’s planning reforms.

Richard Hunter, the head of markets at the investment platform Interactive Investor, said: “The recent interest cut, improving affordability and the possibility of less planning permission red tape have all recently worked in favour for the sector.”

Bellway wants to take over its smaller rival Crest Nicholson but was initially rebuffed until Crest said in mid-July that it was “minded” to accept Bellway’s improved £720m offer. The companies have extended the deadline for negotiations to 20 August.

They said on Thursday that they needed more time, although “good progress has been made on reciprocal due diligence with a number of elements satisfactorily completed by both parties”.

Two other housebuilders, Barratt – which is the biggest in the UK – and Redrow are also due to combine in a £2.5bn deal . On Thursday, Britain’s competition regulator said it had found one area where it had concerns , around one Barratt development in Whitchurch and nearby towns, and asked the two companies to submit proposals to address these.