Taylor Wimpey signals a recovery in homebuyer demand with completions expected to rise further in the second half of 2023.
Rising borrowing costs and a deteriorating economic climate have depressed the housing market, pushing down home prices and putting pressure on builders’ margins.
But Taylor Wimpey told investors that while factoring in broader macroeconomic uncertainties, demand has rebounded from weakness in the final quarter of 2022, when Kwasi Kwarteng’s mini-budget triggered a surge in mortgage rates.
Demand from home buyers buoyed by lower mortgage rates
The closely monitored Rics survey of chartered surveyors in early April found that home prices and sales levels, as well as new listings and buyer demand, have remained sluggish over the past month.
However, the study showed signs that the picture appears to be improving.
In March, Taylor Wimpey announced huge profits, but warned of a much weaker order book.
The company now expects to complete between 9,000 and 10,500 homes by 2023, equivalent to an assumption of 0.5 to 0.7 annual net sales, “with completions weighted further toward the second half.”
Jennie Daly, CEO of Taylor Wimpey, said: “We have seen a continued recovery in demand from low levels towards the end of 2022, supported by good mortgage availability, and have seen a gradual improvement in the sales rate as as the sales season progresses. spring advanced. ‘
The group added: ‘While challenges remain for our clients, especially start-ups, targeted marketing spending has allowed us to keep client interest at a healthy level.
“There is a continued commitment from mortgage lenders to provide loans with good product availability and rates reduced from Q4 2022 highs.”
Taylor Wimpey’s net private sales rate for the year ending April 23 was 0.75, down from 0.97 a year ago, with a 15 percent cancellation rate compared to 14 percent. in 2022.
The company highlighted its “high value” land reserve as a “differentiator,” telling investors it remains “very selective in our land additions” with fewer than 500 new lots approved this year.
He told investors that while construction cost inflation remains high, it is “starting to ease from the 9 to 10 percent reported in March, a trend the group expects to continue “as the year progresses.” .
Taylor Wimpey is targeting £19m annual cost savings, but will spend £8m by 2023 to achieve it.
It said: “These changes do not affect our existing market coverage, the ability to provide high-quality products and services to our customers, or the ability to take advantage of market opportunities as they arise.”
Taylor Wimpey shares they were up 0.2 percent in early trading at 125.85 pence.
Daly said: “While we remain cautious about continued macroeconomic uncertainty, Taylor Wimpey is a strong and flexible company distinguished by our high-quality land bank and experienced teams with a strong focus on operational discipline.
“On behalf of the broader management team, I would also like to take this opportunity to thank Irene Dorner, who is stepping down as president today.
“We look forward to welcoming Robert Noel to the role, who brings more than 30 years of experience in the real estate industry.”
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