Bellway (BWY), which announces full-year results on Tuesday, has already indicated that in the year to July it sold a record 7,750 homes - up 13 per cent on the previous year. Cost inflation has been covered by a 5 per cent rise in average selling prices to £224,000. And the outlook for the current year is equally encouraging, with a forward order book of over 4,500 homes valued at £1.1bn.
Housebuilders will also be digesting the latest government initiative to boost the supply of affordable homes. This involves the construction of 200,000 homes for first-time buyers under 40 by 2020. Under current Section 106 rules, builders are obliged to include an element of affordable homes for rent in any development. Under the new proposals, affordable homes can be built for outright sale, but these must be offered at a 20 per cent discount to market value.
The exact details are yet to be finalised, but the presumption is that public sector land will be made available to builders at no cost, thereby preserving margins. Initial reactions saw share prices fall, possibly because unlike upfront payments for affordable homes built for housing associations, the builders will only be paid when the new homes are sold, which could have an impact on cash flow.
