Taylor Wimpey sees higher cancellation rate in H2

In a trading statement, the housebuilder said that cancellation rates for the year to date had risen to 13%, up from 11% in 2015. Sales rates also dipped slightly to 0.75 per outlet per week from 0.76 in 2015. For the second half of the year to date, sales rates were reported at 0.70 compared to 0.74 in 2015.

However, Taylor Wimpey said that the UK housing market has remained positive in the second half of 2016, with a high level of customer confidence. Customers benefit from a competitive mortgage environment, with a wide choice of mortgage products available across a range of loan to value ratios.

“While there remains some uncertainty following the UK’s vote to leave the European Union, we are encouraged to see that the housing market has remained robust and trading has remained resilient,” said Pete Redfern, Chief Executive of Taylor Wimpey. “We have a strong order book position for 2016 and going into 2017, and we will maintain our focus on delivering our medium term targets. Looking ahead, we continue to implement our disciplined strategy which ensures that we are well placed to perform well through all market conditions and deliver enhanced value through the cycle.”

The housebuilder noted that build costs are expected to increase by c.3-4% during 2016 with the majority of cost pressures coming from labour where skilled resource availability has improved but not at the same pace as the increase in new home supply. “Whilst we expect to see some impact on input prices from the moving exchange rate, we do not expect this to be significant due to the low level of direct imports,” Refern said.

Regarding the land market, Redfern said, “Whilst still exercising an appropriate degree of caution, following the EU Referendum and the associated economic uncertainty, we have continued to progress attractive land deals. In the year to 30 October 2016, we have added c.11,500 plots to the short term landbank at similar financial returns to previous years. With a high-quality short term landbank, which is at the optimum scale for our business, coupled with a continued strong conversion rate from our strategic pipeline, we remain focused on the quality of the individual sites and structure of commercial terms to add value.”

Whilst the implications following the EU Referendum are still unclear, the UK housing market has remained resilient, with long term fundamentals underpinned by strong demand.

“Looking ahead, we remain confident that our business model and strategy focused on managing the business through the cycle positions us to perform well through all market conditions,” Redfern said. “We remain committed to the announced £450 million total dividend payment to shareholders in 2017.”