Bellway warns sales will be flat until July 2011

Housebuilder Bellway has warned that sales volumes are likely to remain flat until next summer, as it revises its predictions for 2011 in the face of falling consumer confidence.

This week the firm announced it had replaced last year’s £36.6m loss with a pre-tax profit of £44.4m for the year to 31 July 2010.

But it said weekly sales were lagging behind last year’s levels because of buyer nervousness and continued rationing of mortgages.

We’ll do more homes if we can, but there’s a fog of uncertainty out there

John Watson, Bellway

John Watson, Bellway’s chief executive, warned that the period after the general election had been uncertain, and sales had picked up only slightly in the autumn selling season.

Sales for the past eight weeks have been running at just under 90 homes a week - 6% less than the same period last year.

Watson said this meant that previous guidance to the market, which was that the number of homes built next year could be as high as 5,000, looked optimistic.

“It’s a difficult call, but we think sales of homes are likely to remain flat, he said. “We’ve a mindset to do more if we possibly can, but there’s a fog of uncertainty there.”

Watson added that the possibility of significant cuts to government housing spend on the back of this week’s spending review settlement was adding to the uncertainty.

He said: “In my 3,000 home order book there are 1,000 housing association units, and I’m pretty sure those will come through.

“The doubt in my mind is: what happens to this in the following year if spending is cut - will social housing numbers reduce?”

Watson’s guidance caused analyst Numis to reduce its profits forecast for Bellway, and it took the shine off strong 2010 results, with turnover up 12% from the previous year.

Watson said the firm had spent £200m on land in the past year, most of which was in London and the South-east. The group has a forward order book of £397m and £59m of net cash.