One of the UK’s largest housebuilders Taylor Wimpey has seen its profits fall in a challenging climate – but full-year completion forecast offers encouragement.
The company saw its pre-tax profits fall from £334.5m for first half 2022 to £237.7m for first half 2023.
Group completions for the period were 5,120 homes (H1 2022: 6,922) and the housebuilder confirmed a total order book of 7,866 homes, excluding joint ventures, with a value of £2.14bn as at 2 July 2023 – this compares to 10,102 homes with a value of £2.8bn for first half 2022.
However, the company says full year UK completions should be in the upper end of earlier forecasts.
Taylor Wimpey chief executive Jennie Daly comments: “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”.
She adds: “As we move into the second half of the year, our focus remains 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.”
AJ Bell head of investment analysis Laith Khalaf is encouraged by Taylor Wimpey’s latest numbers.
“The housebuilding sector could do with some good news given widespread concerns about the state of the property market and the fact many people can no longer afford to buy a home.
“Taylor Wimpey has come to the rescue, saying it has completed more home builds than expected and is guiding for full year completions to be at the upper end of previous guidance”.
He adds: “The positive situation on completions helped to offset a sharp drop in profit margins for Taylor Wimpey as it built fewer homes than a year ago and dealt with build cost inflation. Fortunately, cost inflation is starting to ease.
“The industry faces a conundrum – plenty of people want to buy a house, but sadly the sharp jump in mortgage costs is blocking them from achieving that dream.
On top of this, Khalaf points out the Taylor Wimpey claim that the planning system remains ‘extremely challenging’ and could negatively impact the supply of homes across the industry in the future.
“This leaves the UK in the same situation as before: too much demand versus supply. In theory that should be supportive for house prices over the longer term.”
