House sales sink at Taylor Wimpey as Budget fears weigh on buyer demand

Housebuilder Taylor Wimpey has blamed the upcoming November Budget for a further deterioration in buyer demand in recent weeks.

Rumours over changes to stamp duty, capital gains tax and council tax in the 26 November fiscal event have seen some buyers and sellers halt their plans. 

Britain’s housebuilding sector has seen sales rates come under pressure in recent months as high inflation and borrowing costs have continued to weigh on affordability, compounding a environment of weak consumer confidence.

FTSE 250-listed Taylor Wimpey told investors on Wednesday it achieved a net private sales rate of 0.65 per outlet per week in the nine weeks to 28 September, down from 0.7 over the same period last year.

While its sales rate for the year to date is up marginally year-on-year at 0.74 per outlet per week, the group’s total order book is around £50million below last year at just over £2.1billion.

Taylor Wimpey said there are ‘various issues impacting customer sentiment and propensity to buy’, including ‘the impact of the delayed UK Budget on short term customer confidence’.

The group was forced to cut profit guidance in July, citing one-off charges related to remediation works and a Competition and Markets Authority (CMA) probe.

Britain’s housebuilding sector has seen sales rates come under pressure in recent months as high inflation and borrowing costs have continued to weigh on affordability

Meanwhile, rivals Barratt Redrow and Vistry have warned economic uncertainties are likely to continue to weigh on demand.

Nevertheless, Taylor Wimpey said it remains remain ‘well positioned’, reiterating full-year guidance for 10,400 to 10,800 new home completions, excluding joint ventures, and an operating profit of £424million.

It told shareholders it would help lift sales by bolstering the number of outlets it operates from. Taylor Wimpey wants to grow from its current level of 215 outlets, up from 207 last year.

The group said: ‘Going forward, average outlets will increase year on year as we unlock value from our strong landbank and redeploy capital for growth.

‘We remain confident in the underlying fundamentals of the UK housing market, with its pressing need for new homes, and in the medium-term potential of the business to deliver profitable growth and maximise shareholder returns.’

Taylor Wimpey shares were up 0.7 per cent to 103.8p in early trading.

Analysts at Peel Hunt, which hold a 110p price target on Taylor Wimpey, said: ‘The shares are down 16 per cent year-to-date [making them]…the worst-performing large-cap housebuilder.

‘The group has released new medium-term targets of delivering c.14,000 UK completions at group operating margins of 16 to 18 per cent. 

‘The company expects growth to be driven by higher outlet numbers, without the need for new net land investment (it targets a 4.5-5.0-year land bank). Over time, it aims for a return on net operating assets rising to >20 per cent.’

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