According to house builder Taylor Wimpey, even though mortgage lending is being squeezed the housing market is stable. More home loans, said the house builder, which are aimed at individuals with low deposit have emerged under the NewBuy scheme, however mortgage lending was constrained.
Taylor Wimpey had massive debts in 2009 and almost collapsed but has since recovered and has foreseen an improved business performance this year. In their recovery plan they boosted home completions whilst managing to gain a rise in its ASP (Average Selling Price). Peter Redfern, chief executive, has said that although the wider economic conditions are uncertain, they have been pleased with the stability in trading conditions, also the strength of orders placed. Their half-year profits were £78.2million, more than double the previous six months.
They have been driven through an extra 8% in home completions also a rise of 5% in their average selling prices. Their UK revenues have risen 11.36% to £903.3m in the half year to July 1. The trading performance recovery was also emphasised in the operating profit margin of the UK, which has increased from 8.4% to 11.4% in a year.
In late morning trading Taylor Wimpey’s shares were up 1.18p to 45.33p. Of current trading the firm said that the market remained stable, with underlying pricing unchanged during the first half of the year. Mortgage lending remains constrained, but they say they are encouraged by the initiation of greater loans to value products from the beginning of 2012, especially under the NewBuy scheme.
Taylor Wimpey welcome the newly announced scheme, ‘Funding for Lending’, although they say it is too soon to measure the benefits to mortgage lending. With its previous set of full-year results Taylor have reintroduced a dividend, following this with a six month payout of 19p. They expect this to represent about a third of the current year dividend.
Keith Bowman, Hargreaves Lansdown Stockbrokers’ equity analyst, said that house builders in general, including Taylor Wimpey, are continuing to outperform the wider housing market. He feels this is a combination or increased returns, focus and tight cost control.