Bellway Warns UK Homebuilding Will Slow Despite 2026 Profit Growth

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British homebuilder Bellway ended its latest financial year with more completed homes and higher profits, then warned that production is likely to fall in the year ahead. The reversal offers a view of how higher mortgage costs can hit a builder’s order book even after a strong period of deliveries.

In its October 13 full-year results announcement, Bellway reported 9,695 completed homes for the year ended July 31, 2026, up 10.8% from 8,749 a year earlier. Revenue rose 13.6% to £3.162 billion. Underlying operating profit increased 5.6% to £320.6 million, while the underlying operating margin narrowed to 10.1% from 10.9%.

The margin decline matters because more completions did not translate into proportionate earnings growth. Construction costs, selling incentives and the mix of homes delivered can erode profitability even when total revenue rises. Bellway’s statutory pretax profit increased to £270.2 million from £221.9 million, a different measure from the underlying profit figures management uses to discuss recurring performance.

For fiscal 2027, Bellway forecasts 9,000 to 9,400 home completions. At the midpoint, that would be about 495 fewer homes than in fiscal 2026. Management pointed to a smaller forward order book, elevated borrowing costs and persistent affordability pressure. As of October 2, the forward order book held 4,981 homes, down from 5,285 a year earlier, with a value of £1.438 billion compared with £1.527 billion.

The weaker pipeline followed slower private reservations. In the nine weeks after August 1, Bellway reported a private reservation rate of 0.50 per outlet per week including bulk sales, compared with 0.51 in the comparable period last year. Excluding bulk sales, the rate slipped to 0.45 from 0.48. The gap suggests institutional or bulk transactions may play a larger role in maintaining volumes when individual buyers hesitate.

Management is also watching Britain’s proposed Your First Home scheme. Chief Executive Jason Honeyman told analysts that, based on the former Help to Buy program, a well-designed successor could eventually lift Bellway’s volumes by around 10% and help restore output to at least 10,000 homes annually. That is the company’s scenario, not a government projection or a guaranteed effect.

The scheme’s details were still awaited ahead of the October 28 budget, according to Reuters’ report on the earnings call. Buyers may defer decisions while waiting to learn whether they qualify, what deposit support is available and which properties are eligible. A support program can therefore influence transactions before it actually begins, although the scale of that effect has not been established.

Bellway said it expects more bulk completions in fiscal 2027 after 615 such homes in fiscal 2026. Those sales can improve delivery certainty and cash flow but may carry different margins from individual retail sales. The company also announced plans for substantial shareholder returns, including a £150 million buyback program, reflecting management’s confidence in its balance sheet despite near-term market caution.

The outlook reflects wider British housing weakness. WRE News reported on September’s RICS survey, which found softening price expectations and stronger rental demand as financing concerns grew. Bellway’s results add company-level evidence: the existing order book can support current deliveries while the next year’s pipeline weakens.

Investors will be looking for two distinct developments. The October 28 budget may clarify the scope of the proposed first-time-buyer support program. Subsequent reservation figures will show whether prospective buyers return and whether the builder can rebuild its pipeline without relying on heavier incentives. For now, Bellway’s own guidance anticipates fewer homes completed in fiscal 2027 despite the profit growth it has just reported.