Published by Global Banking and Finance Review
Posted on January 16, 2025
By Aby Jose Koilparambil
(Reuters) -UK homebuilder Taylor Wimpey on Thursday flagged a rise in building costs as the sector navigated affordability and broader economic woes, but said it was well placed to build more homes in 2025 than last year as market conditions improve.
British homebuilders recently have faced pressure from worries over slower-than-expected reduction in interest rate cuts, tax hikes, rising labour costs and reduced government spending, even as an unexpected drop in UK December inflation soothed some nerves.
"Market conditions are uncertain, and we continue to monitor the impact of mortgage costs on affordability," CEO Jennie Daly said in a statement.
Excluding joint ventures, Taylor Wimpey built 9,972 homes in Britain in 2024, down about 4%, while total group completions including joint ventures dropped 2.4% to 10,593 units.
Aarin Chiekrie of Hargreaves Lansdown said in a note that volumes were not expected to ramp up massively in the near term for Taylor Wimpey, and there had been some softness in the average selling prices at a time when some of its peers were seeing modest rises.
The company said that while price negotiations for 2025 were ongoing, it expected greater building-cost pressure as suppliers assess the impact of the UK budget, including increased labour costs kicking in from April.
Shares in the FTSE 100 UK homebuilder were down 4.4% at 109.35 pence by 1405 GMT.
The High Wycombe, UK-based company said its year-end order book excluding joint ventures stood at about 2 billion pounds, up from 1.77 billion a year earlier, and reiterated that it expected its annual operating profit to be in line with the market view.
Earlier in the week, Taylor Wimpey's FTSE 100 peer Persimmon forecast its 2024 earnings at around the upper end of market forecasts, buoyed by improved sales and pricing strength, while midcap builder Vistry cautioned about an uncertain housing market outlook.
(Reporting by Aby Jose Koilparambil in Bengaluru; editing by Subhranshu Sahu, Jason Neely and Bernadette Baum)
Explore more articles in the Finance category
