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Taylor Wimpey sees top-end profits despite uncertain markets

Journalist: Newsteam, Newsteam

ended 12. January 2024

Taylor Wimpey PLC (LSE:TW.) expects to report annual operating profit at the top-end of guidance despite an uncertain market and challenging planning backdrop.

The housebuilder said total completions in 2023 were 10,848, down from 14,154 in 2022, with UK home completions down to 10,438 from 13,773.

The net private reservation rate for 2023 was 0.62 homes per outlet per week compared to 0.68 in 2022 with UK average selling prices up 5.1% to £370,000.

The company said build cost inflation continued to moderate throughout the second half of 2023 and it expects a figure of around 4% in the first half of 2024. 

Looking ahead, Taylor Wimpey said it has seen "good levels of enquiries so far this year and it is encouraging to see recent mortgage rate reductions which will improve affordability”.

However, Jennie Daly, CEO, cautioned that "in the short term the market remains uncertain and the planning backdrop extremely challenging".

Profit for 2023 is seen at the top end of the guidance range of £440 million to £470 million.

  • Given Taylor Wimpey's projected 4% build cost inflation, in H1 2024, how much do mortgage rates need to fall further to maintain housing affordability for potential buyers ?
  • Are lenders adjusting their mortgage products to capitalise on these evolving markets ?
  • Taylor Wimpey expressed an “extremely challenging planning backdrop”, how could this impact the availability of new homes, and what needs to be done ?
  • Taylor Wimpey expects profit at the top-end of their guidance range. How do you think this financial performance might influence lenders' willingness to offer favorable mortgage terms or launch new mortgage products targeting Taylor Wimpey properties? 

 

4 responses from the Newspage community

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Editor
Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
House building is a double edged sword, with record house prices in 2023 caused by inflation in the sector, profits were sky high. However, demand has been shaky and continues to look negative, with no firm plan for reducing rates by the UL central bank. Shares rocketed this morning, but the overall outlook for 2024 will be reliant on better monetary and fiscal policy and a better plan from the next government on housing.
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Editor
Darryl Dhoffer
Founder at The Mortgage Geezer
Looking at this statement from Taylor Wimpey, in particular the build costs. They remind me of territorial squirrels hoarding pine cones, with a potential rise of 4% in the first half of 2024. Mortgage rates, as a consequence need to keep reducing to entice potential buyers. Lenders for newly built homes will need to step up with their sluggish product offerings - however planning delays, cast long shadows, with government-laid boulders - which they need to eradicate. Efficiency, is the key, not endless permit paperwork
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
With house prices remaining relatively static for the last 12 months, runaway inflation has actually meant a real-terms cut in prices, although not by much. Couple that with a world of what looks like lower interest rates and I'd expect demand for housing to be strong this year. The planning point raised by Taylor Wimpey hits the nail on the head on why this is problematic. We have a shortage of housing and no government seems to be able to come up with a plan to build enough lest they upset the NIMBY's. That means you have a huge inflationary pressure where lack of supply pushes prices ever higher and in the long term, ever further out of reach of people trying to get onto the housing ladder.
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Gary Bush
Financial Adviser at MortgageShop.com
We have a low opinion of how UK corporate builders behave so have little positive to say in their favor - having seen most of them abuse the Help to Buy system to the utmost, with now a lot of purchasers realising how overpitched the price of their new home was by these companies. It's long overdue that the government sits down with the land bankers and demands a sustainable and effective low-cost housing initiative - the ability is there if they look beyond the trough. Lenders are ever suspicious of new build purchases which is why a large number still offer lower loan to values for these applications to allow them a margin for error above and beyond all over safeguards they use. Planning applications for large developers aren't tricky, they just need to adhere to the requirements it's not rocket science.