7th Jul 2014 06:50
LONDON (Alliance News) - Housebuilder Taylor Wimpey PLC echoed its peers Monday, citing recovery in the UK housing market for a strong first half of 2014, with sales and pricing at the upper end of its expectations.
All of the UK's major housebuilders have reported an accelerating recovery in the UK housing market through 2013 and into this year, particularly in the southeast of England, where Taylor Wimpey has high exposure. The builders virtually halted new construction in the wake of the financial crisis as banks pulled mortgage financing and the ensuing economic crisis put off house buyers. The companies instead focused on paying down debt.
Last week, Persimmon said it continues to benefit from the recovery in the UK housing market, with revenues in the first half up 33% and total forward sales revenue up 28% on the previous year.
Taylor Wimpey on Monday said customer confidence remains high, while visitor levels remain strong. It said during the first half it achieved an average private net reservation rate of 0.71 per outlet per week, compared with 0.67 per outlet per week a year earlier.
Average selling price of completions increased to GBP206,000 from GBP188,000, while the average selling price on private completions increased 9% to GBP224,00 from GBP205,000. Taylor Wimpey said this increase is due to its continued weighting towards better quality locations and the benefit of the wider housing-market improvement.
Overall the company completed 5,755 homes compared with 5,191 a year earlier. Of this 4,755 were private completions, 940 were affordable homes, and 71 were joint-venture completions. This compared with 4,229 private completions, 930 affordable home and 32 joint-venture completions a year earlier.
Taylor Wimpey said the UK government mortgage financing scheme Help to Buy remains popular and in the first half it completed around 42% of private homes through the equity loan scheme.
The first phase of the Help to Buy scheme in England started in April 2013, making buyers of newly built homes eligible for a 20% equity loan from the government on top of their 5% deposit. The scheme has been extended until 2020 from its original 2016 end date. The second phase, which started in the autumn of 2013, guarantees a portion of a buyer's mortgage of new and existing homes and hasn't so far been extended beyond its current end date of 2016.
FTSE 250-listed Taylor Wimpey said it expects operating profit margin for the first half to be around 16% compared with 13.1% a year earlier.
"We remain on track to deliver an increase in operating margin of at least 300 basis points in 2014," the company said in a statement Monday.
Taylor Wimpey said its Spanish business is expected to make a "positive" contribution to its overall 2014 performance, with new sites adding to profitability. This is despite a "challenging" market in the country, the company said.
In Spain, the company completed 20 homes, down from 27 a year earlier, at an average selling price of EUR254,000, compared with EUR216,000 a year ago.
Financially, the company said group net debt at June 29 stood at GBP40 million down from GBP68.4 million.
Looking ahead, the housebuilder said it is confident for the full year and "building on our solid base to deliver our medium term targets from 2015 and beyond".
The company said it will publish its half-year results for the period ended June 29 on July 30.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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