Taylor Wimpey warns on increasing construction costs amid 'uncertain' market conditions

It completed the sale of 9,972 homes in the UK over 2024, lower than the 10,356 completed in 2023 but at the upper end of its previous guidance range.

This means its full-year operating profit is expected to meet a previous forecast of £416 million.

The average selling price of a home, sold privately in the UK, was £356,000 last year, lower than the £370,000 average price in 2023, it revealed.

Taylor Wimpey said house prices were weaker in the South of England where “affordability has been most stretched”, compared to the North where there had been some price growth.

Looking ahead, the FTSE 100-listed company said it was starting 2025 with a bigger order book than last year and an encouraging level of enquiries, but that it was too early to gauge customer behaviour.

Its performance will depend on the movement of mortgage rates and their impact on people’s ability to afford a home – with further interest rate cuts expected this year.

It also said it was anticipating increased pressure on construction costs due to the changing economic landscape, and as suppliers work to mitigate the impact of the Government’s autumn Budget.

It follows a string of businesses and retailers warning that they may have to raise prices to help absorb the cost of higher taxes this year.

Jennie Daly, Taylor Wimpey’s chief executive, said “market conditions are uncertain, and we continue to monitor the impact of mortgage costs on affordability”, but that the developer was “well placed to play our part in addressing the significant undersupply of UK housing”.

She said: "We have delivered a good performance during 2024 with full year UK completions towards the upper end of our guidance range, as previously indicated, and operating profit expected to be in line with our previous guidance.

"These results have been achieved while maintaining our high-quality build and customer service standards - with our customer service scores the highest they have ever been - testament to the hard work and commitment of our teams on the ground.

“Taylor Wimpey is a strong and agile business with a clear strategy focused on operational excellence. While market conditions are uncertain, and we continue to monitor the impact of mortgage costs on affordability, we enter 2025 with a strong order book and land position, underpinned by a robust balance sheet and highly experienced teams, which positions us well to deliver volume growth in 2025.”

“We remain confident in the attractive medium and long term fundamentals of the sector."

The company said the Government’s plans to reform the planning system in order to accelerate house-building targets were a positive step for the industry.

Aarin Chiekrie, an equity analyst for Hargreaves Lansdown, said: “Taylor Wimpey remains on solid ground, despite a steep share price decline in the final months of 2024 as the UK Budget, sticky mortgage rates and economic fears weighed on the whole sector.

“The order book’s also risen, now sitting at £2 billion, giving Taylor Wimpey good revenue visibility in the near term which should help it ride out the current macroeconomic uncertainty.”