Housebuilder upbeat as sales surge

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Housebuilder Taylor Wimpey said it performed “strongly” in the first six months of the year, with sales and prices at the upper end of expectations.

The Buckinghamshire-based firm said in the half year to June 29 it increased the amount of homes it built by 11 per cent to 5,766, while average selling prices rose 10 per cent to £206,000.

Ryan Mangold, chief financial officer, told The Yorkshire Post that development activity, visitors and sales are up 10 per cent in Yorkshire over the last year.

“It’s a part of the country that we continue to invest in,” he said.

The company added it expected to see a profit margin of around 16 per cent, compared with 13.1 per cent in the same period a year ago.

The group, which teetered on the brink of collapse in 2009 due to its massive debts, has been helped by a strengthening economy, record-low borrowing costs and the Government’s Help to Buy house loan scheme.

It said it welcomed affordability checks introduced in April’s Mortgage Market Review and new rules last month from the Bank of England aimed at preventing a housing bubble.

Pete Redfern, chief executive, said accelerating price growth in London is moderating, while price gains in other parts of the country were starting to catch up with the capital.

Under the Bank’s measures lenders must ensure no more than 15 per cent of new mortgages are given to people borrowing more than 4.5 times their income.

Lenders will also have to stress test borrowers’ ability to repay loans if their mortgage rate were 3 per cent higher than the rate at the time the loan was approved.

Taylor Wimpey said the Government’s Help to Buy scheme remained “very popular” with customers, accounting for 42 per cent of 4,755 private home completions in the first half of the year.

The housebuilder added that cancellation rates remain very low at 11 per cent, compared with 14 per cent in the same period 12 months ago.

The business currently operates from 308 outlets, against 322 in the same period last year, and added that its faster pace of sales accounted for outlets closing earlier.

The firm said its total order book rose 26 per cent to £1.6bn over the period, which represented a 7 per cent rise in homes to 7,587.

The business is “confident” of meeting its full-year expectations, due to the improving economy, the four-year extension of the Help to Buy scheme to 2020 and measures brought in to prevent the overheating of the housing market.

Mr Mangold said the economic recovery is sustainable and the housing market is providing a huge platform for economic activity.

Taylor Wimpey has around 30 developments in Yorkshire, each with 50-70 workers, and offices in Wakefield and Stockton-on-Tees.

In May the firm set itself tougher financial targets over the next three years, and said it planned to boost its assets by 15 per cent a year between 2015 and 2017.

The housebuilder also reiterated its plan in May to return up to £50m to investors by July and £200m by July 2015.

Analysts at Shore Capital said the announcement was in line with consensus expectations but warned that the sector remains volatile.