Taylor Wimpey sees growth despite cooling market

Peter Redfern said housing market is growing sustainably. Picture: Contributed
Peter Redfern said housing market is growing sustainably. Picture: Contributed
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HOUSEBUILDER Taylor Wimpey upped its guidance on profit margins yesterday despite the cooling housing market, as it welcomed a more sustainable rate of growth being achieved.

Chief executive Peter Redfern said the group’s return on sales would rise about 4 per cent from last year’s 13.6 per cent, against its previous guidance of a 3 per cent lift in margins.

The firm said in a trading update that it had fully sold its housing stock for this year, with average selling prices up 19 per cent year-on-year, more than offsetting a 5 per cent increase in building costs.

The City consensus is for Taylor Wimpey’s profits to jump almost 50 per cent to £462 million this year.

“The increased margin guidance is the result of good pricing and cost discipline, especially in land buying,” broker Liberum said in a note.

Redfern said he expected to see volumes rise over the coming years, with up to 12,500 homes built by the group in 2014, up from 11,696 in 2013.

The Mortgage Market Review and new rules introduced this year by the Bank of England have imposed tighter affordability checks on borrowers and more restrictions on mortgage lenders. Redfern said this had taken some unsustainable heat out of the housing market, instead allowing the industry to grow “steadily and sustainably”.

The Council of Mortgage Lenders reported yesterday that mortgage lending to first-time buyers fell 3 per cent in September, the second consecutive monthly decline, in another sign the market was cooling.

Taylor said its forward order book accounted for 7,814 homes valued at a total of £1.7 billion.

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