British builders Bellway, Modwen pin hopes on sustained demand

By Aby Jose Koilparambil

(Reuters) – British midcap building firms Bellway and St Modwen Properties painted a rosy picture before the crucial spring home-buying season as demand improved steadily after initial COVID-19 disruptions.

The companies joined bigger rivals Barratt and Taylor Wimpey in providing a robust outlook, sending shares in the sector higher. Bellway led with a 3% gain.

House building has been a bright spot for Britain’s economy as buyers have taken advantage of low interest rates and a temporary tax break. Appetite for bigger homes suitable for remote working has also driven demand.

Speedy vaccination rollout and Britain exiting the European Union have helped reduced uncertainty in the market.#

Newcastle-based Bellway, which builds everything from one-bedroom apartments to six-bedroom family homes and luxury penthouses, forecast a surge in the number of homes it would deliver in its financial year to July 31, after record first-half volumes.

Bellway said it expected to deliver 9,800 homes this financial year, compared with 7,522 a year earlier.

The company said the number in the six months to Jan. 31 rose 6.3% to a record 5,656 units as it raised its full-year completions outlook for the second time in three months.

“While uncertainty remains in the wider economy, the underlying demand for good quality new homes remains robust,” Chief Executive Jason Honeyman said.

Shares in St Modwen, which caters to industrial and residential sectors, rose 1.4% even though the company swung to an annual loss as it forecast a jump of up to 25% in home completions in 2021.

The latest lockdown imposed in January and the March 31 deadline for Britain’s relief on stamp duty, a tax on property purchases, have threatened to hamper prospective buyers’ purchasing power.

British house prices fell last month for the first time since May as a boom in activity late last year started to lose steam.

(Reporting by Aby Jose Koilparambil and Muvija M in Bengaluru; Editing by Tomasz Janowski and Edmund Blair)