Taylor Wimpey reports building cost rises have peaked

Aaron Morby 7 years ago

Britain’s second biggest house builder Taylor Wimpey predicts that cost pressures in the industry have now peaked after rising 5% last year.

Reporting soaring annual profits this morning, chief executive Pete Redfern, said that with a slower market growth, he anticipated reducing build cost pressure in 2015.

“During the year, manufacturing of key components such as bricks increased to keep pace with the growth of the industry and, as a result, we are now seeing reduced pricing pressure on materials,” he said.

“We anticipate that build cost inflation should somewhat reduce as the industry adjusts to the increased labour and material demand.

He added: “It is pleasing to note that capacity for key supplies is increasing following greater certainty on the rate of housebuilding.”

Build cost per unit increased to £113k last year (2013: £105k) reflecting a change in quality mix and the impact of 5% build cost inflation.

Redfern said that despite a looming election buyer confidence remained high, with a healthy outlook for the housing market this year in the current affordable mortgage environment.

“The beginning of spring selling season has seen trading at the better end of expectations.

“We believe that the current strong performance can be sustained and improved and therefore we have proposed a doubling of the dividend pay-out to the top end of our dividend policy range.”

Taylor Wimpey completed 12,454 homes across the UK, up 6.5%, with an 11.5% spike in total average selling price to £213,000 from £191,000 in 2013.

Full-year revenue rose 17% to £2.7bn, up from £2.3bn a year earlier. This was helped along by operating profit which swelled 54% to £480m.

This saw operating profit margin climb strongly from 13.6% in 2013 to 17.9% last year.

Over the year the land bank with planning rose 6% to just over 75,000 plots.

Taylor Wimpey pinned its total UK land cost per completion as a percentage of selling prices to 21.2% (2013: 21.5%) reflecting the benefits of conversions from the strategic land pipeline, although gains were partially offset by product mix and an increase in London volumes.

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