- Home sales slow as prospective buyers hold off ahead of the November Budget
Housebuilder Taylor Wimpey has echoed calls for the Government to bolster support for buyers as weak affordability and Budget anxiety weigh on home sales.
Rumours over changes to stamp duty, capital gains tax and council tax in the 26 November fiscal event have seen some buyers and sellers halt their plans.
Britain’s housebuilding sector has seen sales rates come under pressure in recent months as high inflation and borrowing costs have continued to weigh on affordability, compounding a environment of weak consumer confidence.
And weaker sales across the housebuilding sector have raised doubts Labour can achieve its target of building 1.5 million new homes over the course of this Parliament.
FTSE 250-listed Taylor Wimpey told shareholders on Tuesday it had achieved a net private sales rate per outlet per week of 0.63 between 30 June and 9 November, down from 0.71 last year after first-half momentum slowed.
Boss Jennie Daly said market conditions had remained ‘challenging’ over the period, ‘impacted by uncertainty ahead of the upcoming UK Budget and continued affordability pressures’.
She added: ‘The Government’s housing ambitions, and the significant economic and social benefits of increased housing supply can only be unlocked by effective demand, particularly for affordability constrained first time buyers.’
Taylor Wimpey has seen its sales fall and its order book contract
The group’s forward order book also contracted from 7,771 homes at a value of around £2.2billion to 7,253 homes worth roughly £2.1billion.
Taylor Wimpey expects to complete 10,400 to 10,800 homes this year, excluding joint ventures.
Daly’s comments follow those from industry giant Barratt Redrow earlier in November, with Britain’s biggest housebuilder urging the Government to double-down on its efforts to help first-time buyers get on the property ladder.
Taylor Wimpey said it continues to expect an annual operating profit including joint ventures of £424 million, with a focus on ‘managing the business tightly to generate value from our strong landbank to deliver profitable growth and maximise shareholder returns’.
Daly added: ‘We have delivered a resilient performance thanks to the hard work of our teams on the ground. Market conditions remain challenging, impacted by uncertainty ahead of the upcoming UK Budget and continued affordability pressures.
‘Looking ahead, UK housing market fundamentals are highly compelling. As set out at our recent Investor and analyst event, we remain confident in our ability to deliver profitable growth and maximise shareholder returns over the medium term.’
Taylor Wimpey shares were down 3.8 per cent at 101.8p in early trading, bringing one-year losses to around 24 per cent.
Anthony Codling, managing director at RBC Capital Markets: ‘It is clear that the UK housing market has softened in the second half as Budget uncertainty has been growing since the summer.
‘This all but cancelled the autumn selling season and sales rates in the second half are softer than they were in the first.’
Oli Creasey, head of property research at Quilter Cheviot, added: ‘Thus far, the majority of Government intervention in the housing market has been supply-focused (easing of planning restrictions etc.), but Taylor Wimpey is the second builder this month (after Barratt Redrow) to explicitly state that the Government should consider what levers it can pull to address slow demand as well.
‘This could mean the return of Help to Buy, although there has been no suggestion so far from the Chancellor that this will form part of the Budget on 26 November.’
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