(Updates with closing prices in fifth paragraph.)

Oct. 18 (Bloomberg) -- Bellway Plc, the U.K. homebuilder focused on first-time buyers, said annual profit rose 51 percent after the company sold more homes at higher prices.

Net income for the 12 months through July climbed to 50.1 million pounds ($79 million) from 35.8 million pounds a year earlier, the Newcastle, England-based company said today in a statement. That beat 48.3 million pounds, the average of five estimates compiled by Bloomberg.

“Against a backdrop of ongoing economic uncertainty, the housing market has stabilized and the group, in general, has performed very well in the year,” Chairman Howard Dawe said in the statement.

Homebuilders are boosting profit margins by building houses rather than apartments and using less expensive land acquired during the global recession that ended in 2009. The U.K. government yesterday ended a consultation on policies that seek to nurture the economy by simplifying planning laws.

Bellway rose 21 pence, or 3.1 percent, to 698.5 pence in London trading, the biggest gainer in the FTSE 350 household goods and home construction index. The stock has gained 4.3 percent this year, giving the homebuilder a market value of 844.1 million pounds.

The company completed sales of 4,922 homes, up from 4,595 homes a year earlier, and the average selling price increased 7.6 percent to 175,613 pounds. The company increased its full- year dividend to 8.8 pence a share from 6.7 pence a year earlier.

Reservations in the first nine weeks of fiscal 2012 are almost 11 percent higher than the same period last year.

London Homes

The completion of a number of developments around London, where a typical home sells for more than 250,000 pounds, and a switch from apartments to family homes outside London increased the average sale price.

Legally completed sales in their northern divisions rose 18 percent to 2,345 and prices remained broadly static. The southern division saw average selling prices rise 13.1 percent and sales volumes were 2,577, similar to the previous year.

Some first-time buyers in London are using large deposits when purchasing, Chief Executive Officer John Watson said in a telephone interview. “The typical response is: ‘my mother and father have helped me.’ So I’m finding that a little bit in London, but in the rest of the country that’s not replicated,” he said.

Bellway spent 250 million pounds during the year on land and land creditors, who are sellers paid closer to the time construction starts. Most of the land was bought in the south of the U.K. “We’ve grown our land bank and will continue to do that,” Watson said.

--Editors: Ross Larsen, Andrew Blackman.

To contact the reporters on this story: Chris Spillane in London at cspillane3@bloomberg.net; Neil Callanan in London at ncallanan@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.