Taylor Wimpey sales rate slumps by 44%

Housebuilder Taylor Wimpey has said that its sales rate has dropped by 44% in the second half of the calendar year as a result of “heightened” economic uncertainty.

The £4.3bn turnover housebuilder said in a trading update that private sales per site per week had dropped to 0.51 in the second half of the calendar year, compared to 0.91 in the same period in 2021 “reflecting customer response to heightened levels of economic uncertainty”.

This figure is lower than the sales rate of 0.6 reported by Persimmon for the period from July to date in its trading update yesterday, albeit that business said the sales rate had dropped much further – to 0.48 - in the last six weeks. Taylor Wimpey’s sales rate for all of 2022 to date is 0.74 sales per site per week.

Like Persimmon, Taylor Wimpey also said it had seen an increase in cancellations amid the turmoil in the mortgage market, despite the fact that it said that visits to its website had continued at “good levels”, and “where customers have locked in mortgage rates, they remain keen to complete their purchase.”

Taylor Wimpey said its cancellation rate for the second half of the year had increased sharply to 24% from 14% in the same period in 2021.

Taylor Wimpey’s update follows turmoil in the housing market in the wake of the short-lived Truss administration’s ill-fated mini-budget, which has seen mortgage interest rates soar, hitting housing demand already impacted by the cost of living crisis and fears over the economy.

Savills has predicted a 10% fall in house prices next year, with the CPA this week predicting a 10% fall in housing starts.

However, Jennie Daly, CEO of the business said Taylor Wimpey was “performing well” in a challenging economic and political backdrop and was on track to deliver expected full year operating profit of more than £900m.

While Persimmon yesterday said it expected to reduce sales volumes next year, Taylor Wimpey said it now expected volumes to remain flat at 2022 levels. The firm said it was responding to the new conditions by operating in a “highly selective” manner in the land market, and had approved the purchase of very few plots since the half year.

Daly said: “While sales rates have been impacted by wider economic uncertainty, we continue to see good levels of customer interest in our homes and a desire to get onto or move up the housing ladder.

“We operate from a position of financial strength and as we continue to navigate the current macro-economic challenges, our quality landbank in customers’ preferred locations positions us well. We will continue to manage the business with discipline as we seek to deliver value for all our stakeholders.”

The firm said it has 86,000 plots in its short term landbank, and expects to end the year with net cash of £800m.