Bellway aims to drive down building costs even further

Aaron Morby 12 years ago
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House builder Bellway is shaving around £2,400 from each home it builds by beating down trade contractor prices.

The house builder said it was achieving further reductions in build costs, especially on plastering, foundation and road and sewer works.

Some of this gain has been absorbed by rising timber and steel prices, but cost falls helped to deliver gains in operating margin.

Announcing a turnaround in fortunes for the year to July, Bellway said it had managed to bounce back from a loss of £36m last time to deliver a £44m pre-tax profit this year.

Chief  executive John Watson said: “These cost movements do not affect every site but are highlighted when existing developments have been re-drawn and re-tendered.

“On these sites, cost savings of around £2,400 per unit have been identified and the divisions will now need to work hard to deliver these savings as labour rates respond quickly to workload increases.”

Watson also warned that the cost implications flowing from new technology, especially in relation to CO2emissions, were difficult to predict and would remain a focus for future cost control.

Bellway remained cautious about the outlook for housing. Sales in the early part of what is traditionally an active autumn selling period have picked up, albeit only slightly, following the usual summer lull as  potential homebuyers awaited the outcome of the Government spending review.

Bellway said the board was mindful of the past experiences and would take a cautious approach to upping house building volumes.

The house builder currently holds a strong land bank, a forward order book of £397m and with £59m of net cash said it was ready to respond when a better market returns.

During the year, Bellway sold 4,595 homes, up 5% over last year, at an average selling price of £163,175, ahead almost 6%, mainly due to changes in product mix.

This helped turnover jump 12.4% from to £768m.

During the year £208 million was spent on land. Divisions have released more homes to build and Bellway anticipated that work in progress levels would increase as the year progresses.

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