Bellway reports profits fall

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Housebuilder Bellway today said it was facing "difficult times" in the housing market as it unveiled a 3.9 per cent drop in interim pre-tax profits.

The group said reservations were down 9 per cent amid a shift in consumer confidence after last summer's credit crunch.

First-time buyers have been particularly hit hard by the crisis and are struggling to meet lender demands for higher deposits, said Bellway.

It reported pre-tax profits of £96.9 million in the six months to the end of January, against £100.8 million the previous year.

But the firm said its strategy of forward selling helped soften the blow of a tougher housing market, with £670 million worth of forward orders so far secured - 88 per cent of its revised annual target for the whole financial year.

Bellway - the UK's fourth largest housebuilder - said the market was particularly challenging in the Midlands, Yorkshire and the North West.

However, demand and keen pricing in the affordable sector of the market was holding up well in Scotland and the south of England, according to Bellway.

The Newcastle-based group, which targets the lower end of the housing market, said it was seeking to tempt buyers with incentives, such as by offering carpets and curtains in the sale price.

It added its sales teams were reporting "pleasing" visitor numbers, although this had failed to filter through to reservations.

The number of houses sold in the six-month period fell slightly to 3,252 against 3,264 in the same period last year, leaving housing turnover up 0.5 per cent to £568.4 million.

The average house price increased marginally to £174,800 from £173,300.

Alistair Leitch, finance director of Bellway, said first-time buyers were being priced out of the market, as lenders demanded deposits of between 25 per cent and 30 per cent in some cases.

"A first time buyer finds it very difficult to get a 25 per cent deposit, even with a Bellway low cost property, unless they have someone backing them," he said.

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