Logo of Bellway is seen at a construction site in Hemel Hempstead, Hertfordshire, Britain, October 12, 2020. REUTERS/Matthew Childs

(Reuters) -British homebuilder Bellway raised its dividend and announced a 150-million-pound ($199.20 million) share buyback on Tuesday after its annual pretax profit beat expectations, buoyed by strong demand during the spring selling season.

The group, however, has flagged a slower start to its new fiscal year, citing weak consumer sentiment and affordability concerns ahead of the UK budget next month.

Bellway increased its ordinary dividend by 29.6%, raising it to 70 pence per share from 54 pence in the previous year.

Stubborn inflation and high borrowing costs have reignited affordability challenges in the housing market, putting pressure on Bellway. The homebuilder is banking on increased government support, including multi-billion-pound investments to boost housing supply, to drive home completions and profit growth this year.

Still, concerns over potential stamp duty hikes in Britain's finance minister Rachel Reeves's November budget have fuelled fears of a deeper downturn in new-home sales, compounding pressure on the sector.

Bellway's warning echoes those of its rivals, including Taylor Wimpey, Barratt Redrow and Vistry, all of whom have flagged a challenging start to the autumn selling season and flagged persisting pressures on demand.

In the 10 weeks since August 1, Bellway's private reservation rate per outlet every week, including bulk sales, fell to 0.51 from 0.60 a year earlier.

Bellway reiterated its expectations to complete 9,200 homes in the fiscal year through July 2026, supported by a strong order book and numerous sales outlets.

The company reported an underlying pre-tax profit of 289.1 million pounds for the year ended July 31, exceeding analysts' expectations of 282.04 million pounds, according to data compiled by LSEG.

($1 = 0.7530 pounds)

(Reporting by Raechel Thankam Job in Bengaluru; Editing by Sherry Jacob-Phillips)