Taylor Wimpey on track as house price growth offsets cost increases

Taylor Wimpey said on Thursday that the UK housing market had remained positive in its second half, with good customer demand and mortgage availability.

The FTSE 100 housebuilder said it was expecting to deliver full-year results in line with its expectations.

It said it achieved a “strong” sales rate of 0.91 homes per outlet per week in the second half to-date, up from 0.76 year-on-year and 0.95 homes per outlet per week for the year-to-date, compared to 0.73a year ago.

Cancellation rates for the year-to-date had remained at normal levels, at 14%, compared to 21% in 2020 and 15% in 2019.

Taylor Wimpey said it was still seeing house price inflation fully offsetting build cost inflation, as the industry experienced pressures on the cost and availability of certain materials and a general shortage of drivers for haulage.

There had been easing in certain areas, and going forward, the firm said it expected conditions to gradually improve as suppliers adjust to current demand levels.

It said it was “effectively managing” those pressures, aided by its scale and “strong” partner relationships and agreements.

During the second half of the year to the end of October, Taylor Wimpey added 5,431 plots of land to its short-term landbank, which stood at around 84,000 plots at the end of October.

Its strategic land pipeline totalled about 148,000 potential plots, with the company saying its landbank would continue to grow as it processed incremental land deals agreed following its equity raise in June.

Taylor Wimpey said it had a “strong” balance sheet and cash flow, and expected its year-end net cash position to remain strong, with the closing balance subject to the timing of conditional land purchases.

Looking ahead, the housebuilder said market conditions remained supportive for new build homes, with continued low interest rates, good mortgage availability, and ongoing government support for the housing market, particularly for first-time buyers.

The company said it was on track to deliver full-year results for 2021 in line with its previous guidance, as it prioritised its operating margin, remaining on plan to deliver on its target of 21% to 22% in the medium term.

It said it was still expecting “modest growth” in completions in 2022, followed by more significant outlet-driven growth in 2023.

“We are pleased with performance in the second half to date, and remain on track to deliver full year 2021 results in line with previous guidance,” said chief executive officer Pete Redfern.

“We have been building a strong forward order book for 2022 and continue to see good demand for our homes, supported by a positive market backdrop.

“Despite well-publicised industry supply chain pressures, we are managing our supply chain effectively and are benefiting from our scale and strong partner relationships.”

Redfern confirmed that Taylor Wimpey was continuing to see house price inflation fully offsetting build cost inflation.

“Looking ahead, market conditions remain supportive, and with the benefit of our strong land position we are well placed to deliver against our medium-term targets.”

At 0902 GMT, shares in Taylor Wimpey were down 0.7% at 156.9p.