UK house builder Bellway said it was on track to build more than 10,000 homes this year for the first time, despite an industry-wide shortage of materials such as bricks and roof tiles.
Jason Honeyman, Bellway’s chief operating officer, said the shortage was exacerbated by a higher demand for bricks in the wake of the Grenfell Tower fire, as construction firms sought alternatives to cladding.
Materials are taking about three or four months to arrive – both from within the UK and overseas – instead of two to four weeks. Some roof tiles are in such short supply that they take five to six months to be delivered to building sites, Honeyman said.
In addition, the weaker pound has pushed up the cost of imported materials. Bellway’s building costs rose 3% in the first half and this is likely to continue in the second half. Honeyman said bricks and roof tiles had risen even more in price, by 6-7%.
He added that shortages of skilled builders – a perennial issue in the house building industry – were less of an issue for Bellway at the moment.
Overall, the company said it was benefiting from a “favourable” backdrop of low interest rates and mortgage availability, as well as a focus on homes priced in the middle-to-lower end of the market, predominantly outside London where demand is slowing.
Newcastle-based Bellway sold 4,741 homes in the first half of its financial year to the end of January, an increase of 6.3% on the same period a year earlier. It has put the housebuilder on course to complete a record number of houses in the full year to the end of July, as consumer confidence is “seemingly unaffected by the ongoing uncertainty surrounding the forthcoming exit from the EU”, the company said. The average selling price of a Bellway home was £275,945 in the first half, up 7.7%.
“The group has invested significantly in land to achieve future growth, in a market place in which customer demand is robust and mortgage availability remains good,” said John Watson, Bellway’s executive chairman.
“This positive trading environment, together with a substantial order book, bodes well for the full year and should enable the group to complete in excess of 10,000 new homes.”
The company said its nationwide presence and lower price had insulated it from the slump in London, where would-be buyers have found themselves priced out of the market.
Aside from The Residence, its flagship development in Nine Elms in Battersea, Bellway has few sites in central London, in Highgate and Greenwich. The company’s focus is on outer London boroughs, where demand has held-up better, and the commuter belt, Manchester, the Midlands and Scotland.
Bellway has sold the majority of the 514 homes at The Residence, with 100 apartments left to sell before construction finishes next winter.
Meanwhile annual growth in UK house prices edged down to 4.9% in the year to January from 5% a month earlier, the Office for National Statistics said. The weakest growth was in the north-east, at 0.7%, followed by London, where prices grew by 2.1%. Over the month, the average price of a home fell by 0.3% to £225,621.
“House price growth remained steady, with prices increasing strongly across much of the country, although London and the north east are both lagging behind,” said Phil Gooding, a statistician at the ONS.
Ed Stansfield, chief property economist at Capital Economics, said the latest ONS figures suggested that “prices will do little more than tread water this year and edge down in London.”