Housebuilder Taylor Wimpey said low housing supply and high demand were driving healthy sales growth but played down the risk of the UK market overheating.
The chief executive, Pete Redfern, acknowledged on Monday that conditions were perfect for housebuilders, with a shortage of housing and rising demand as wage growth started to outpace inflation. But he said there was no need to fear a housing bubble: “While the market has been healthy, it’s not taken off as it has in previous years, it’s more sustainable. We’re not saying the housing market is not cyclical but the cyclicality seems more muted. It’s a good market, not a rampant one.”
The firm’s rate of sales this year is 0.76 per outlet per week, up from 0.66 at this stage last year, as the traditionally weaker summer months proved better than usual. Taylor Wimpey is closely watching the progress of the housing and planning bill to see whether the right regime is put in place for new “starter homes” that sell for 20% below market rate.
Redfern said the details of the bill would determine whether starter homes, which have faced criticism that they are not genuinely affordable, were an opportunity or a risk for developers.
Strong demand for housing has helped Taylor Wimpey to a record order book of 8,546 homes to build, worth £2.1bn, in the year to date.
The firm echoed reports of rising labour costs due to a shortage of skilled labourers, with the cost of building a house up 5%. But it said pressure was easing thanks to an increased focus at the company on apprenticeships and graduate trainee schemes. It expects to have net cash of £220m at the end of the year, after paying out £308m in dividends to shareholders.
The prospect of rising interest rates should not derail the firm’s progress, it said, with customers showing resilience to tighter monetary policy. “Against a backdrop of rising real incomes and tighter mortgage regulation with good availability and affordability, we believe that consumers have resilience to future interest rate movements.”
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