Taylor Wimpey hails strength of housing market after upping home completions

Housebuilding giant Taylor Wimpey has managed to increase the number of houses it built and the price paid by new homeowners despite a backdrop of economic and political uncertainty.

Taylor Wimpey has a string of Scottish developments including in Penicuik. Image: Contributed

Releasing a trading update, the group described the UK housing market as stable, although in London and the south east of England conditions were “more challenging”.

Over the last year home completions rose by 5 per cent to 15,719, with 3,548 affordable homes built. Cancellation rates rose slightly, from 14 per cent in 2018 to 15 per cent last year, although average selling prices on private completions nudged up 1 per cent to £305,000, with the overall average selling price increasing to £269,000, from £264,000.

The company’s total order book stood at £2.18 billion as of the end of last month, up from £1.78bn, although building costs rose by 4.5 per cent.

Chief executive Pete Redfern told investors: “Our results for the year to 31 December 2019 will be in line with our expectations.

“Despite an uncertain political and economic backdrop in 2019, we have continued to experience a good level of demand for our homes and trading in the second half of the year was as anticipated. The group has again delivered a record sales rate and we increased home completions by circa 5 per cent in the year.

“In 2019, our focus was on strengthening the long-term sustainability of the business, further improving our build quality and customer offering, as well as increasing operating capacity and flexibility.

“In 2020, we will continue with these initiatives and will also prioritise a renewed cost focus and process simplification improvements.”

Landbank

He added that Taylor Wimpey’s short-term landbank was sitting at 76,000 plots, with the group operating a “broadly replacement approach to our landbank”.

At its current rate of building, the company would have enough land to build homes for the next 4.8 years.

The firm added: “We start the year with a strong order book and continue to target a smoother profile of completions throughout the year but expect 2020 to continue to be second half weighted.”

Richard Hunter, head of markets at Interactive Investor, noted: “The housebuilding sector is in a sweet spot at present, more recently fuelled by the removal of a layer of political uncertainty, and Taylor Wimpey has certainly felt the benefit. Naturally, there are concerns which will need to be closely monitored.”