UK housebuilder Taylor Wimpey reveals that its net private sales rate for the year to 23 April was 0.75, versus 0.97 a year earlier, with a cancellation rate of 15% compared to 14%.
In its latest trading statement, Taylor Wimpey also shows that its total order book value stood at £2.38bn, down from £3.03bn a year earlier. This represents 8,576 homes, versus 11,119 homes in 2022.
However, the housebuilder continues to expect 2023 completions to be in the range of 9,000 to 10,500, broadly equivalent to an annual net sales rate assumption of 0.5 to 0.7, with completions more weighted to the second half.
Prevailing annualised build cost inflation remains high but is beginning to moderate from the 9-10% Taylor Wimpey reported in March, a trend it expects to continue as the year progresses.
Taylor Wimpey chief executive Jennie Daly maintains the company has seen continued recovery in demand from the low levels experienced towards the end of 2022, supported by good mortgage availability, and an incremental improvement in sales rate as the Spring selling season has progressed.
“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.”
The statement stressed that whilst challenges remain for customers, particularly first time buyers, targeted marketing spend enabled Taylor Wimpey to maintain customer interest at healthy levels. I also points to a 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 concedes that the planning backdrop remains difficult with a lack of resource and well-known bottlenecks at various stages in the planning process.
SEMH (Mortgage Broker) founder Graham Cox believes that with demand seemingly picking up in recent weeks, Taylor Wimpey are painting a slightly rosier picture than when they posted their annual results in early March.
“Then, they stated completed transactions would fall by about a third this year, with reservation rates ‘significantly lower’. The key driver of the housing market is first-time buyers. Until property prices fall by a further 10-20%, a lack of mortgage affordability will keep demand subdued”.
Investing Reviews equity research analyst John Choong sees Taylor Wimpey’s Q1 trading update today as a breath of fresh air for investors, as the narrative of a housing market crash is being rebuffed day by day.
“The net private sales rate continues to recover while build cost inflation is expected to have peaked. As such, it’s no surprise to see the developer maintain its full-year guidance”.
Taylor Wimpey’s more upbeat assessment on the UK housing market follows similar sentiments reported yesterday in rival builder Persimmon’s trading update.
