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UPDATE 1-Bellway says market still weak, reservations lower
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London, Aug 14 (Reuters) - British housebuilder Bellway said activity in the housing market remained weak in June and July, with home reservations falling by around 45 percent in the second half of the financial year.
The company, which focuses on the lower end of the market, said in a trading update on Thursday that restricted mortgage supply and a lack of customer confidence continued to induce low levels of activity in the housing market.
The Royal Institute of Chartered Surveyors this week said sales per surveyor were the weakest since records began in 1978, while Halifax, Britain's biggest mortgage lender, said house prices had fallen by more than 10 percent in the last year and mortgage approvals were at record lows.
In addition, the Bank of England's inflation data released yesterday hinted that interest rates would not be cut anytime soon, leading to sharp falls in housebuilder shares.
Bellway stocks, which have underperformed the housebuilding sector <.FTASX3720> by around 35 percent in the last year, were down 2.69 percent to 565 pence by 0821 GMT.
'Housebuilders shares fell between 7-15 percent across the sector yesterday no doubt in anticipation of a gloomy trading update from Bellway this morning, but even after taking into account of this falls the sector remains around 70 percent above its July lows,' Cazenove analysts said.
'We continue to believe that the relief rally following Barratt's refinancing deal has been overdone and that we will see share price weakness in the lead up to the reporting season, which started today,' they added.
Bellway said its home sales were down 14.2 percent year-on-year to 6,556 units and average selling prices fell to about 169,000 pounds from 173,000 pounds, while home reservations worsened from the 33 percent fall indicated in June.
'Bearing in mind market conditions, and the fact that cancellation rates increased to unprecedented levels towards the end of the financial year, we consider this to be a satisfactory performance,' the company said.
The housebuilder highlighted that it currently did not envisage widespread land writedowns and was operating well within its banking facilities, in contrast to peers such as Taylor Wimpey or Barratt Developments .
It also pointed to reduced expenditure on land and tighter controls on work in progress, as well as to an amalgamation of some divisions to cut overheads.
(reporting by Marc Roca; editing by David Cowell/Simon Jessop) Keywords: BELLWAY/TRADING
tf.TFN-Europe_newsdesk@thomson.com
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