A mainstay of UK house building founded by an entrepreneurial family will build fewer homes next year because of the high mortgage rate.
Bellway – founded by the Bell family in Newcastle-on-Tyne in 1946 – says it is being hurt not only by the rising interest rates, but also by squeezed margins caused by falling house prices.
The Bank of England put up interest rates from 5% to 5.25% – a 15-year high – on August 3 in the latest attempt to bring down one of the highest inflation rates among the world’s major economies.
Jobs to go.
In drawing in its horns, Bellway may also cut 90 jobs from its 3,000-strong workforce. It is also considering closing two of its operating divisions, Sky News reported.
“The backdrop of macroeconomic uncertainty and cost of living pressures affected consumer demand during the year and, given affordability remains constrained by higher mortgage interest rates, underlying trading conditions are likely to remain challenging in the near term,” Bellway chief executive Jason Honeyman said.
Margins squeezed.
Bellway said it expected its underlying operating margin for its last financial year to be around 16%, down from 18.5% in the year-ago period. This is down to high build costs and overhead inflation.
The group said it had built 10,945 homes in the fiscal year, down from the guidance of 11,000. Falling house prices mean the number of houses built next year is likely to be fewer.
Quarrying by day, building by night.
John Thomas Bell, born in North Seaton Northumberland, founded his first building company in the1920s. He worked in a stone quarry by day and built houses by night.
The first incarnation of the company crashed in the depression of the 1930s. In 1946, Bell relaunched the building company in Newcastle-on-Tyne, along with his two sons, to take advantage of the post-war housing boom.
The company listed on the stock exchange in 1961 and spread its building operations across the UK in the 1970s.
