Taylor Wimpey upbeat on UK housing market

The firm saw the strong sales rate of the second quarter continue through the traditionally slower summer period and into the autumn. For the second half to date, sales rates are around 22 per cent above the 2014 equivalent period at 0.73, in 2014 they were 0.60.

Pete Redfern, chief executive at Taylor Wimpey, said: “We have seen an excellent summer selling season strengthen further in the autumn period, with customer confidence high and demand underpinned by rising real wages and good access to a wide range of mortgage products.

“Against this backdrop, we are reporting record order book levels and expect to deliver an improvement in operating profit margin of over 200 basis points in 2015 and a return on net operating assets of over 25 per cent.

“As we look forward, we are particularly pleased to see that the tighter lending requirements are helping to ensure that monthly payments remain affordable and sustainable, which contributes towards a healthy outlook for both homebuyers and homebuilders.”

Taylor Wimpey said the housing market has continued to be “very positive”, with high levels of customer confidence and demand converting into increased sales and healthy sales price growth.

The housebuilder added that it was pleased to see that customers were increasingly benefiting from a broad choice of mortgage products, across a range of loans to value, while tighter lending requirements continue to help ensure that monthly payments are affordable and sustainable.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said: “In line with the broader sector, Taylor Wimpey has flagged ongoing robust trading. A record order book has been achieved, with a further expansion in the group’s operating profit margin forecast. An impressive jump in second half sales rates has been reported, whilst over a quarter, 27 per cent, of 2016 private completions have already been sold. Sales price growth is outpacing rising build costs, while ongoing cash generation is fuelling a continued shareholder cash return programme.

“In all, the update reflects still highly solid consumer demand for new housing. Rising real wages and high competition in the mortgage product market are playing their part, while both Government and Bank of England policy remain highly supportive.

“On balance, and despite some valuation concerns – Taylor Wimpey shares are up around 40 per cent over the last year – today’s update is highly reassuring, with analyst consensus opinion for a buy unlikely to change.”