UK homebuilder Taylor Wimpey says house prices still rising
UK HOMEBUILDER Taylor Wimpey says home prices have stayed resilient even as soaring mortgage rates cool demand.
Taylor Wimpey’s average UK selling price rose 6.7 per cent to £320,000 (S$546,873) in the first six months of the year compared with the same period in 2022, the company said in a statement on Wednesday (Aug 2).
The homebuilder reported its average weekly private net sales rate in the first half of the year was 0.71. That is an improvement on the second half of 2022, when the rate was 0.48, but still short of the 0.9 average for the same period last year.
“The first half of the year has been characterised by variable market conditions including substantially higher mortgage rates,” chief executive officer Jennie Daly said in the statement. “While this has inevitably impacted our results, I am pleased that we have delivered a resilient performance with first half completions slightly ahead of our expectations.”
UK households are facing an avalanche of pressures triggered by rising interest rates and the worst cost-of-living crisis in a generation. Key mortgage rates have soared above 6 per cent this summer, leading to a flurry of downbeat earnings reports from the nation’s biggest developers.
Taylor Wimpey said that its cancellation rate in the four weeks ended Jul 30 – an early indicator of distress in the housing market – was 24 per cent, compared with 19 per cent in the same period a year earlier.
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The company said that house price growth was not able to fully offset build cost inflation in the period, but said that it expects the rate of inflation to moderate in the second half of the year.
Still, the housebuilder expects to sell 10,000 to 10,500 homes in the full year, which is towards the top end of its previously forecast 9,000 to 10,500 homes.
The company said that underlying interest remains strong, despite high mortgage rates.
“We remain well-positioned to manage the business through near-term challenges, while maximising value in the medium to long term,” Taylor Wimpey’s Daly added.
“Taylor Wimpey’s solid H1 results, combined with upgraded guidance for 10,000 to 10,500 completions in 2023, as well as its ability to achieve house-price growth despite ongoing headwinds, may support upward consensus revisions. The developer’s average weekly reservations per site of 0.71 exceed peers and point to resilience.” said Iwona Hovenko, Bloomberg Intelligence senior industry analyst. BLOOMBERG
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