Taylor Wimpey (LON: TW) have reported strong second half demand for their housebuilding services, despite tough market trading conditions.
Shares of Taylor Wimpey dropped 2.53% despite the update, trading at 165p. 13/11/19 14:33BST.
Britains third largest homebuilder gave shareholders reassurance that they were not going to let Brexit complications and external market issues affect trading.
Taylor Wimpey reported strong second half demands in a market where competitors such as Barratt Developments (LON: BDEV) have seen slow sales in their most recent update.
Additionally, Galliford Try (LON: GFRD) and Bovis Homes (LON: BVS) agreed a merger deal in order to combat the slump in demand and slow trading period.
Taylor Wimpey did warn homebuilders about potential rising costs in 2020, however in the Wednesday statement, the firm speculated that cost inflation may reduce in 2020 instead.
The FTSE100 (INDEXFTSE: UKX) listed home builder, reported a 12.5% rise in its orders, to £2.7 billion as it exploited strong demand coupled with lower interest rates and the governments Help to Buy scheme boosting demand.
“Forward indicators for sales have remained at healthy levels albeit we have seen some increasing customer caution, particularly in the higher-priced markets of London and the South East, as a result of the ongoing political and economic uncertainty,” the company said.
Total order book, excluding joint ventures, stood at 10,433 homes as at November 10 from 9,843 homes a year earlier.
“The key takeaway from Taylor Wimpey’s latest trading update is that the housebuilder says build cost inflation is starting to soften and that this trend will continue in the coming months,” Russ Mould, investment director at AJ Bell, said.
“This is significant as the combination of rising costs and stalling house prices have been putting pressure on the profitability of the wider industry and led the market to question its shaky foundations.
“The disappointment is that these cost pressures are not yet easing rapidly enough for Taylor Wimpey to maintain its previous margin guidance, even if overall guidance is maintained.”
