Newcastle-based FTSE 250 housebuilder Bellway has warned that housing completions and margins will come under pressure in its new financial year, even as it rewards shareholders with a £150m buyback and higher dividend.

The company expects to complete between 9,000 and 9,400 homes in FY27, down from 9,695 homes in FY26, while underlying operating margins are also set to decline as build-cost inflation, elevated sales incentives and a greater proportion of lower-margin bulk sales impact profitability.

Signs of softer demand - due the ongoing impact of affordability constraints and higher mortgage rates on the housing market - were evident in Bellway's latest trading metrics.

The group's forward order book fell to 4,981 homes valued at £1.44bn, compared with 5,285 homes worth £1.53bn a year earlier, while private reservation rates excluding bulk sales slipped to 0.45 homes per outlet per week from 0.48.

The cautious outlook overshadowed what was otherwise a robust set of annual results. Revenue increased 13.6% to £3.16bn, housing completions rose 10.8%, underlying pre-tax profit climbed 5.7% to £305.7m, and adjusted operating cash flow rose 36% to £868.6m.

The stronger balance sheet enabled Bellway to announce a £150m share buyback programme and increase its total dividend by 7.1%

Bellway CEO Jason Honeyman 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 shares were up around 1% in early trading after the results.

AJ Bell investment director Russ Mould said: “Lower volumes, increased costs and flat prices is not an inspiring outlook for its new financial year, but shares in housebuilder Bellway are up all the same, thanks to a new £150 million share buyback that serves to re-emphasise just how cheap the shares may prove to be, if, as and when any housing market recovery kicks in.

“A new government programme designed to help first-time buyers of new-build houses could help here, as could lower interest and mortgage rates, even if over the long run affordability is the key issue, and the solution here is much higher wages, lower house prices or something, somewhere between the two."

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