Taylor Wimpey flags recovery in demand

Taylor Wimpey has flagged a recovery in homebuyer demand with completions expected to pick up further in the second half of 2023.

Soaring borrowing costs and a worsening economic environment have subdued the housing market, driving house prices lower and squeezing builders’ margins.

But Taylor Wimpey told investors that, while it was mindful of wider macroeconomic uncertainties, demand has recovered from weakness in the final quarter of 2022 when Kwasi Kwarteng’s mini-budget led to an overnight spike in mortgage rates.

The closely watched Rics survey of chartered surveyors earlier in April found that house prices and sales levels, as well as new listings and buyer demand, remained sluggish last month.

However, the survey found signs the picture looks set to improve.

In March, Taylor Wimpey revealed bumper profits but warned of a much weaker order book. 

The firm now expects to complete on 9,000 to 10,500 homes in 2023, equivalent to an annual net sales rate assumption of 0.5 to 0.7, ‘with completions more weighted to the second half’.

Taylor Wimpey chief executive Jennie Daly said: ‘We have seen continued recovery in demand from the low levels experienced towards the end of 2022, supported by good mortgage availability, and have seen an incremental improvement in sales rate as the Spring selling season has progressed.’

The group added: ‘Whilst challenges remain for our customers, particularly first time buyers, targeted marketing spend has enabled us to maintain customer interest at healthy levels.

‘There is a continued commitment by mortgage providers to lend with good levels of product availability and with rates reduced from the highs of Q4 2022.’

Taylor Wimpey’s net private sales rate for the year to 23 April was 0.75, down from 0.97 last year, with a cancellation rate of 15 per cent compared to 14 per cent in 2022.

The firm highlighted its ‘high-quality’ landbank as a ‘differentiator’, and told investors it remains ‘highly selective in our land additions’ with fewer than 500 new plots approved year-to-date.

It told investors that while build cost inflation remains high it is ‘beginning to moderate from the 9 to 10 per cent levels reported in March, a trend the group expects ‘to continue as the year progresses’.

Taylor Wimpey is targeting annualised cost savings of £19million, but is spending £8million in 2023 to achieve this.

It said: ‘These changes will not affect our existing market coverage, ability to provide high-quality product and service to our customers or ability to take advantage of market opportunities should they emerge.’

Taylor Wimpey shares were up 0.2 per cent in early trading to 125.85p. 

Daly said: ‘While we remain cautious of continued macroeconomic uncertainty, Taylor Wimpey is a strong and agile business differentiated by our high-quality landbank and experienced teams who have a sharp focus on operational discipline.

‘On behalf of the wider management team, I would like to also take this opportunity to thank Irene Dorner who today steps down as Chair. 

‘We look forward to welcoming Robert Noel into the role, who brings with him more than 30 years’ experience in the property sector.’