Taylor Wimpey margins under pressure as homebuilder costs rise
Housebuilder Taylor Wimpey expects margins to come under pressure from lower selling prices and rising costs this year, despite demand holding up well over the spring.
The housebuilder still anticipates completing 10,400 to 10,800 properties this year, excluding joint ventures, with around 45 per cent of these homes being delivered in the first half of 2025.
It also expects operating profits of £444million even though first-half operating margins are set to be lower.
Taylor Wimpey blamed the effects of underlying pricing in its order book at the start of the year and a modest return of build cost inflation.
Despite current economic volatility and affordability pressures, the High Wycombe-based business said there remained 'good quality customer interest' for its homes.
Its weekly net private sales rate for the year to 27 April was 0.76 per outlet, compared to 0.70 in 2024.
Consequently, the company's order book totalled over £2.3billion and 8,153 houses as of Sunday, versus £2.1billion and 7,742 properties at the same time last year.
Jennie Daly, chief executive of Taylor Wimpey, said: 'The Spring selling season has progressed in line with expectations, with good levels of customer demand reflected in our sales rate.
'Notwithstanding the wider macroeconomic backdrop, affordability is improving with lenders remaining committed to the housing market, albeit first-time buyers continue to experience some challenges.'
Average UK house prices dipped by 0.6 per cent to £270,752 in April, according to figures released by Nationwide.
It follows changes to stamp duty rates at the beginning of the month, with the zero threshold halving to £125,000 and the first-time buyers' threshold dropping from £425,000 to £300,000.
All major British lenders now offer fixed-rate mortgage rate deals of under 4 per cent in expectation the Bank of England will continue cutting base rate.
The UK base rate currently stands at 4.5 per cent after being cut by 0.25 percentage points in February.
Financial markets currently point to three more cuts of the same size this year, taking base rate to 3.75 per cent at the end of 2025.
Taylor Wimpey told investors: 'We operate in an attractive market with significant underlying demand for new homes.
'We have set the business up to deliver sustained growth with a high-quality landbank, strong balance sheet and experienced teams.'
Anthony Codling, head of European housing and building materials research at RBC Capital Markets, remarked: 'As wages continue to grow and the expectation is for mortgage rates to fall, the outlook for Taylor Wimpey looks rosy.'
Taylor Wimpey shares were 1.8 per cent lower at 116.3p on Wednesday morning, making them one of the FTSE 100 Index's ten worst performers.
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