Shares in housebuilder Bellway (BWY) slumped 9% to a new year-low of £19.50 after its H1 update failed to reassure investors. Although the CEO reaffirmed his FY26 profit target, he admitted the Middle East conflict represents a risk to the housing market.
Risks are rising
Bellway delivered ‘a robust H1 performance in a challenging market’, said CEO Jason Honeyman. Completions were up 2.7% to 4,702 homes, while average selling prices rose 3.7% to just over £322,000.
The firm said it had seen an improvement in both customer demand and reservations since the start of the year. Underlying operating profit reached £159 million, and Honeyman insisted it was on track to reach £320 million to £330 million for the year.
Although the Middle East conflict hasn’t had a material impact on trading so far, it’s still early days. The risks are cost pressures increase while consumer confidence decreases and mortgage availability worsens, said the CEO.
While it’s too early to say exactly what the Iran war might mean for housebuilders, chances are it’s not good. Given this lack of visibility, the CEO doesn’t have much choice but to stick to the firm’s current guidance.
In fact, Bellway has a decent sized order book and actually raised its outlook for FY volumes and prices today. It also has a large land bank with something like a decade’s worth of plots still to develop.
Moreover, since the start of February, net private reservations excluding bulk sales had been accelerating. From 0.46 units per outlet per week in H1, they had jumped to 0.66 units, level with the same period last year.
Unfortunately, with the geopolitical situation changing day to day investors are simply taking off their riskier bets. Why own a housebuilder when you can hide in energy stocks or just sit in cash until the storm blows over.
Read the press release here: https://www.bellwayplc.co.uk/investor-centre
