Taylor Wimpey, a major housebuilder, has reported a significant drop in annual profits and plans to build fewer homes this year. However, they have also noted early signs of recovery in the housing market.
The company’s underlying pre-tax profits fell by 48 percent to £473.8 million in 2023, with revenues dropping by over a fifth to £3.5 billion.
Due to challenging conditions in the housing market, Taylor Wimpey plans to construct between 9,500 and 10,000 homes in 2024, down from 10,438 the previous year.
Despite this, the firm has spotted some positive signs, including lower mortgage costs and the expectation that interest rates will decrease in 2024. This follows a rise to 5.25 percent last summer, the highest level since 2008, which led to a decrease in demand from homebuyers and falling house prices.
This news comes shortly after the Competition and Markets Authority (CMA) announced it was investigating eight of Britain’s largest housebuilders, including Taylor Wimpey, for suspected illegal information sharing. This investigation is due to concerns that collusion may be driving up prices.
In its annual results, Taylor Wimpey stated that it would “co-operate fully” with the investigation.
The company’s full-year report showed a slight increase in the weekly private sales rate to 0.67 per outlet so far in 2024, up from 0.62 the previous year. The cancellation rate also dropped to 12 percent, down from 17 percenta year ago. However, the report also noted that customers were taking longer to make decisions on sales.
Taylor stated: “Whilst still early in the year and at the beginning of the spring selling season, current trading shows some encouraging signs of improvement with reduced mortgage rates positively impacting affordability and confidence in our customer base.”
In 2023, Taylor saw the average house prices on private sales increase by 5.1 percent to £370,000. However, they noted that the market-led house price growth for their regional mix was around 1% last year, a decrease from about eight percent in 2022.
The rise in prices did not fully cover an 8.5 percent increase in building costs, although the group mentioned this had reduced to around one percent so far at the start of 2024.
Jennie Daly, the chief executive of Taylor Wimpey, expressed optimism about the future, stating that the group expects the market to bounce back in 2025.
“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,” she said.
However, shares in the group dropped more than 3% in Wednesday morning trading.
