Bellway sees home reservations tumble due to coronavirus lockdown

Housebuilder Bellway has cautioned that sales activity will be “severely constrained” until lockdown restrictions are lifted further after seeing home reservations plunge nearly 70%.

The Newcastle-based group said the weekly net reservation rate plummeted 69% to an average of 71 homes between March 23, when the UK was placed in lockdown, until May 31 – down from 231 a week a year earlier.

Completions dropped 12% to 6,721 between August 1 and May 31 – including 708 since the March 23 lockdown.

Bellway joined rivals in shutting construction sites, show homes and sales centres following the lockdown, even though construction was allowed to continue throughout.

The housing market also ground to a halt as people were told not to move where possible.

Bellway began the phased reopening of construction sites and sales offices last month as the Government also said estate agents and show homes could open again for viewings.

The group said despite the sales hit, pricing has remained “firm” and that it was seeing a gradual pick-up in customer interest having opened all its sales outlets in England since June 1.

Bellway has also now restarted building work on around 230 sites, although this is focusing on homes in the latter stages of production.

It said: “Given the ongoing uncertainty, financial guidance remains suspended, however, the resumption of build programmes should enable Bellway to slowly increase the number of completions throughout the late summer and autumn months.

“Notwithstanding this, we expect year-on-year sales activity to be severely constrained until a time when ‘lockdown’ restrictions are further lifted.”

Bellway assured that its forward order book remained “substantial” despite the coronavirus impact, down 4% year-on-year at 6,038 homes.

It hopes to gradually increase the construction rate, with aims to allow more than one tradesman to work in a home at the same time, albeit on separate floors, over the coming weeks.

Shares in the group dipped 3% after the update.

But analysts at Liberum said sales activity had been better than expected at Bellway.

They had forecast in April that new home sales would stop for three months before recovering after lockdown restrictions ease.

Bellway said it had at one stage furloughed 75% of its staff, but paid affected employees full basic pay throughout April and May and has not drawn on the Government’s job retention support scheme.

It has secured eligibility for a Covid-19 corporate loan through the Bank of England, but has not yet had to draw down on it.