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Market conditions do not foretell housing sector crash – Taylor Wimpey

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  • 04/08/2021
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Market conditions do not foretell housing sector crash – Taylor Wimpey
Robust mortgage lending rules and an active second-time buyer scene are supporting a healthy UK housing market that’s not about to burst a bubble, Taylor Wimpey chief executive Pete Redfern has said.

 

The housing market executive was speaking on BBC Radio 4’s Today programme as his group reported 7,303 housing completions for H1 2021, up from 2,771 in H1 2020, excluding joint ventures.

The record first-half performance partly reflected delayed Q4 2020 completions, and the comparable period had been heavily impacted by the first Covid-19 shutdown.

Redfern, said: “I don’t think we are heading for a crash. Back in 2007 – when I was running Taylor Wimpey – those conditions were very different to today.

“Investors buying homes was a very significant part of the market in the US and UK. The number of apartments being bought in markets that hadn’t traditionally sustained apartments was very high.

“Mortgage lending was significantly laxer than it is today, and we’d seen five years of house price growth well above inflation levels. None of those things are true today.

“We are seeing a return of second-time buyers to the market, having had several years post-financial crash, where that part of the market has been very subdued. Post-pandemic that has changed people’s mindsets and moved that along.

“In two years’ time, if the same conditions continue, then it’s a different answer. But at the moment, we’ve seen a short-term reaction to the pandemic, but an underlying stable and healthy housing market,” Redfern said.

The housebuilder expected completions to reach the top end of its range of guidance from 13,200 to 14,000 for the full year, and said it was well positioned to accelerate volume growth from 2023.

The forward book of new homes totalled 10,344, with a value of £2,608m, excluding joint ventures, as of 4 July.

 

Fire safety remediation funds

The group set aside £125m in March to pay for fire safety remediation works, “to make apartment buildings safe and mortgageable”.

Redfern said: “We’ve told customers that if you live in a building built by Taylor Wimpey in the last 20 years then we will do the capital remediation works necessary to bring it up to EWS1 standards.”

Revenue was £2,196m for H1, up from £755m in H1 2020. Operating profit was £424m, compared to a £16m loss in H1 2020. Operating margin was 19.3 per cent.

Taylor Wimpey’s interim statement said: “We’ve seen strong demand for homes in the UK, underpinned by low interest rates, good mortgage availability and government support for customers through Help to Buy.”

Increased build costs and supply chain pressure on some materials had been offset by healthy house price growth.

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