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‘Strong underlying interest’ despite higher mortgage rates, Taylor Wimpey says

  • 02/08/2023
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‘Strong underlying interest’ despite higher mortgage rates, Taylor Wimpey says
Housebuilder Taylor Wimpey has said demand is still high that for its homes despite the higher mortgage rate environment, but said that planning “remains extremely challenging”.

The housebuilder reported group completions of 5,120 homes, which compares to 6,922 completions in the first half of the year.

The firm delivered net private sales rate of 0.71, compared to 0.9 in the first half of the year.

The company’s total order book represents around 7,866 homes, excluding joint ventures, with a value of £2.15bn. This compares to 10,102 homes and £2.8bn in the same period last year.

Taylor Wimpey said that the total UK average selling price rose by 6.7 per cent year-on-year to £320,000 which it said as due to house price growth and “positive mix impacts”.

The firm said that first-time buyers accounted for 35 per cent of total private reservations in the first half of the year, down from 43 per cent last year. It added that investor sales had halved to around three per cent compared to the same period last year.

The housebuilder said: “Whilst increased mortgage costs are impacting affordability for our customers, we continue to see strong underlying interest. However, reservations are below the levels we have experienced in recent years.

“Pricing has remained resilient, and the level of down valuations continues to be low. Our focus remains on building as strong an order book as possible to allow us to optimise price going into 2024.”

Taylor Wimpey continued that it had seen some moderation in the rate of material and labour cost inflation but planning “remains extremely challenging”.

It continued that planning would “likely to impact the future delivery of new homes across our industry” and its experience teams were working hard to progress land through the planning stages.

It continued that its full-year completions, barring joint ventures, are expected to be between 10,000 and 10,500. The firm said that this was the upper end of its previous guidance.

The company added that group operating product including joint ventures is expected to be between £440m and £470m.

The company’s profit before tax came to £237.7m, which is a decrease from £334.5m in the same period last year.

Jennie Daly, Taylor Wimpey’s chief executive, said: “The first half of the year has been characterised by variable market conditions including substantially higher mortgage rates. While this has inevitably impacted our results, I am pleased that we have delivered a resilient performance with first half completions slightly ahead of our expectations.

“This performance is testament to the hard work of our teams on the ground and our strong focus on operational excellence and tight cost management.”

She continued that going into the second half of the year its focus was on “optimising all areas of our operations as we continue to support our customers during this uncertain period”.

“With a healthy orderbook and strong underlying interest for our well-located, high-quality homes, we expect full year UK completions excluding joint ventures to be in the range of 10,000 to 10,500, the upper end of our previous guidance,” Daly added.

She said: “Taylor Wimpey is a strong, sustainable and agile business underpinned by a robust balance sheet and an excellent landbank. We remain well positioned to manage the business through near term challenges while maximising value in the medium to long term.”

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