House builders themselves driving prices down, says Bellway

Bellway has slammed rival house builders for driving prices down with the excessive use of sales incentives.

In a trading update today, covering the four months to 30 November, Bellway said that compared with last year:

• Sales rate is 50% down
• Cancellations are at a historical high of 24%
• Visitor traffic is 50% down

The order book at the end of November was £340 million (figure at the same time past year: £680m)

Bellway has secured 75% of its current annual target.

“Sales incentives are used on virtually every private sale and, other than cash discounts, part exchange has been the most commonly used incentive,” said the group.

“More rigorous controls have been put in place since the year-end, and consequently the stock of part-exchange properties has reduced from 330 to 160

“Pricing pressures, driven in the main by certain competitors' activities and lenders' lower valuations, could lead to continued margin erosion. If these pressures persist a further review of the book value of land and work in progress cannot be ruled out.”

Cost pressures have eased and strict controls on work in progress levels, with particular emphasis on selling stock units, has led to the number of completed properties held at present being 15% lower than when last reported.

The proportion of sales to housing associations is likely to increase beyond last year's 20%.