Taylor Wimpey cautious over ‘Boris bounce’

Taylor Wimpey has remained cautious over the prospects of a post-election “Boris bounce” in a City update this morning. It reported that trading was in line with expectations.

The housebuilder reported completions for 2019 up 5% to 15,719, at a strong sales rate of 0.96 reservations per site per week, up from just 0.80 last year. The firm’s profit margin fell to 19.6%, from 21.6%, as it reported “more challenging conditions in London and the South-east and at higher price points”.

However, while it welcomed “the increased political stability following the general election”, it made no comment on post-election trading conditions, and cautioned that “2020 will continue to be a year of change for the UK”.

It said the 2019 results were delivered in a “stable” market “despite ongoing economic and political uncertainty”.

It expects housing completions to be broadly flat in 2020, and confirmed that it plans to return over £600m to shareholders in the year. It said that construction cost inflation had softened in recent months after reaching as much as 4.5% earlier in 2019.

Taylor Wimpey is the first of a series of housebuilders due to report trading updates over the next few days. Analysts are hoping to get a glimpse of the shape of the market since the election.

Taylor Wimpey chief executive Pete Redfern said: “Our results for the year to 31 December 2019 will be in line with our expectations.

“Despite an uncertain political and economic backdrop in 2019, we have continued to experience a good level of demand for our homes and trading in the second half of the year was as anticipated. The group has again delivered a record sales rate and we increased home completions by  about 5% in the year.”

David O’Brien, equity analyst at Goodbody said: “The sector should take comfort in the latest trading update from Taylor Wimpey released this morning ahead of FY results. The highlight for us is the particularly strong growth in the forward order book, which is up 22% in value terms and 17% in unit terms.”

Despite Taylor Wimpey’s caution, O’Brien said the market had seen “material improvements in the space of one month” due both to Brexit and a spike in affordable housing orders.

Full end of year results will be announced on February 26.