Profits fell by a quarter at one of the UK’s major housebuilders, as fewer purchases are going through in the current high inflation and mortgage rate environment.
Fewer houses are being bought, Taylor Wimpey’s results show, as pre-tax profit fell to £237.7m, down from £334.5m during the same period in 2022.
Sales at the UK’s third biggest housebuilder fell along with profits in the first six months of 2023.
The sales rate dropped for private sales and bulk deals, as did the cancellation rate for the first half of this year, compared with the same period in 2022.
Reservations too are below the levels seen in recent years.
Please use Chrome browser for a more accessible video player
The order book, which measures future sales performance, stood at £2.14bn on 2 July, a decrease from £2.8bn a year earlier.
Taylor Wimpey said it planned to build 10,000 to 10,500 homes this year, compared with the 14,154 built in 2022.
Spreaker This content is provided by Spreaker, which may be using cookies and other technologies. To show you this content, we need your permission to use cookies. You can use the buttons below to amend your preferences to enable Spreaker cookies or to allow those cookies just once. You can change your settings at any time via the Privacy Options. Unfortunately we have been unable to verify if you have consented to Spreaker cookies. To view this content you can use the button below to allow Spreaker cookies for this session only.
Click to subscribe to the Sky News Daily wherever you get your podcasts
It comes as mortgage rates rose above 6% for the average five and two-year fixed deal as the Bank of England’s base interest rates were hiked to 5% in an effort to bring down inflation.
The Bank is forecast to raise the rate further, to 5.25% on Thursday.
Longer mortgages
The FTSE 100 company also reported an increase in customers extending their mortgage terms in response to higher monthly repayments.
More than a quarter (27%) of first time buyers of Taylor Wimpey houses are taking out more than 36-year mortgages, compared with just 7% in 2021.
Second time buyers too are extending their mortgages, those taking out mortgages longer than 30 years increased to 42%, compared with 28% two years ago.
Also due to rising mortgage bills, house prices have come down. Earlier this week, Nationwide reported annual property values declined by 3.8% in July – the sharpest fall since July 2009.
Despite this, Taylor Wimpey said it was not seeing major price shifts for its houses.
Pricing has “remained resilient”, the company announcement said, with the level of down valuations low.
Read more:
Persimmon shares knocked as toxic cocktail of pressures hit housebuilders
Housebuilder Taylor Wimpey gives employees £1,000 cost-of-living bonus
Inflation in the goods and services used by the company dropped to 6%, down from the 9-10% rate of rises at the beginning of the year, suggesting price rises have moderated.
Data from Sky News shows mortgage holders are now in the minority in the UK, with most people either owning their home outright (33%) or renting their home (37%) – just 30% of the population are paying off a mortgage.
