LONDON British housebuilder Bellway (BWY.L) cashed in on land it bought over the past five years to report strong profits but warned it is still exposed to a weak economy and the slow progress of measures to kickstart the sector.
The country's fourth biggest house builder said pretax profit was 57 percent up on the previous year, underpinned by investments it had made in cheap land after the country's property market faltered around 2007.
But it is home-buyers' access to finance which remains a challenge for the housebuilding sector, Bellway said.
Initiatives such as the Bank of England's Funding for Lending scheme, which provides loans to banks for a 25 basis point fee - significantly below market rates - in the hope that they will pass on low rates to consumers, have yet to filter through to housebuilders said Chief Executive John Watson.
Watson did, however, praise the government's NewBuy initiative launched in March, which provides state and developer guarantees on 95 percent mortgages.
"It's a useful tool no doubt about it. It's something that more and more lenders are starting to participate in," he said.
Although the company intends to try and continue with its strategy of buying up land at low prices, he warned that lack of availability was holding back the building of new homes.
"We've got to keep an eye on what's going on in Europe, and we've got to keep an eye, more importantly, on unemployment levels," said Watson.
Bellway said its order book increased 3 percent to £441.2 million and reservations since end-July have remained in line with expectations.
The average home selling price jumped 6.3 percent to £186,648, the highest the group has ever achieved, but Watson said this was down to its focus on higher end family homes in the south, rather than inflation in prices.
The group posted pre-tax profit of 105.3 million pounds ($169 million) for the twelve months to July 31, prompting it to hike its final dividend by 59 percent to 14p per share.
"The spring was particularly buoyant and we know that it has edged off a little since then," said Panmure Gordon analyst Rachael Applegate, who maintained a "Hold" rating on the shares but marginally increased her price target to 957 pence from 954 pence.
Bellway's shares were up 2.8 percent at 976.5 pence at 1123 GMT, having risen more than 30 percent since the beginning of the year.
(Editing by Mike Nesbit)