Taylor Wimpey TW.L said it will build fewer homes this year, only days after Britain’s competition watchdog concluded that the sector limited supply to maintain its prices.
The British housebuilder said its first-half operating profit margin would reflect slightly lower pricing in the homes it has coming through, citing cost inflation and investment.
Taylor Wimpey joins other developers that have cut back their building targets as the Bank of England hiked borrowing costs to tame inflation, making houses more expensive.
The industry routinely complains that Britain’s complex planning system is delaying the delivery of new homes.
Taylor Wimpey Chief Executive Jennie Daly said there were some signs of improvement as mortgage rates ease which was “positively impacting” affordability, after reporting a 49% slump in annual profit, in line with market expectations.
“Looking ahead we are well-positioned in an attractive market, with significant underlying demand for our quality homes and are poised for growth from 2025, assuming supportive market conditions,” Daly said in a statement.
The High Wycombe-based company, which also has a minor presence in Spain, said it expects to build about 9,500-10,000 homes in Britain in 2024, including joint ventures, with the midpoint of the range about 7% lower than last year’s 10,438.
Taylor Wimpey’s shares fell 3.4% in early trade.
The Competition and Markets Authority spent a year looking into Britain’s housing shortage, a key issue ahead of an expected election later this year, and concluded the government needed to streamline what it said was a complex planning system.
It also said the industry produced houses at a rate at which they could be sold without needing to reduce their prices.
Taylor Wimpey said its sales rate, as of Feb. 25, stood at 0.67 homes per outlet, compared with 0.62 units last year, while cancellations dropped to 12% from 17% a year earlier.
Its order book – an industry gauge that measures near-term demand – excluding joint ventures – stood at 1.95 billion pounds, compared with 2.15 billion pounds a year earlier.
The FTSE 100-listed .FTSE developer’s operating profit for 2023 was 470.2 million pounds, almost in line with company-compiled average analysts’ estimates of 469 million pounds.
($1 = 0.7904 pounds)
(Reuters)
