Newcastle housebuilder Bellway has warned of an expected drop in operating margins as rising mortgage rates, economic uncertainty and affordability pressures squeeze customer demand.
The company's forward order book stood at 4,981 homes on October 2, down from 5,285 homes, and it expects to build between 9,000 and 9,400 homes next year. Bellway said it expects margins to reduce further in its 2027 financial year due to lower completions and ongoing cost inflation.
Full year results and land bank
Despite the industry headwinds, bosses said its strong balance sheet, high-quality land bank and operational capabilities provide the resilience to navigate near-term uncertainty.
In published full year results for the year ended July 31 2026, Bellway delivered growth in housing revenue of 13.6% to £3.145bn, supported by a strengthened order book at the start of the financial year. House completions increased from 8,749 to 9,695, an increase of 10.8%. Overall revenue was £3.162bn, up from £2.78bn. Operating profit grew 19.3% to £299.1m, and its underlying operating margin reduced to 10.1% from 10.9%.
The proposed total dividend was increased by 7.1% to 75p per share, and the board said it intends to return £150m to shareholders through a share buyback programme during FY27, with the first tranche of £50m launched in September 2026 and now increased to £75m. The group traded from an average of 238 outlets in FY26, eight fewer than last year, with a closing position of 253 outlets as at July 31.
Bellway highlighted a strong land bank comprising a total of 94,666 plots, including 45,992 owned and controlled plots.
Government scheme welcomed
The company used the final results to welcome the Government's proposed Your First Home scheme, commenting on how the UK continues to struggle with a substantial shortage of new homes.
Earlier this summer, the company urged the Government to do more to boost the housing market, saying action was needed to reinvigorate the market and help support potential new homeowners.
Jason Honeyman, chief executive, said: "Bellway has delivered a robust performance, growing both volume output and profits despite ongoing challenges across the housing market. Our continued focus on operational improvement and capital efficiency has enhanced resilience, driven a significant 36% increase in adjusted operating cashflow and supported higher shareholder returns.
"Against a backdrop of near-term economic uncertainty, our priorities remain clear: allocating capital with discipline, maintaining a strong balance sheet with low gearing and investing selectively in land to support future growth. The £150m FY27 share buyback programme announced today is expected to take total dividends and share buybacks across FY26 and FY27 to c.£450m, reflecting our financial strength, cash generation and commitment to delivering long-term shareholder value.
"The UK continues to face a substantial shortage of new homes, while affordability remains a major barrier for many prospective buyers. We therefore welcome the Government's proposed Your First Home scheme, which has the potential to provide significant support for first-time buyers. We look forward to further detail on the scheme and to engaging with Government on its design and implementation.
"Bellway has the financial strength, operational capability and land bank to respond as market conditions improve and increase the delivery of much-needed new homes over the medium term."
Shares had risen by 2.47% to 2,034p at the time of writing.
