UK's Taylor Wimpey warns on annual profit as affordability woes deepen

Detailed summary

By Simone Lobo Nov 11 (Reuters) - Taylor Wimpey lowered its annual home completions forecast for a second time and said profit would likely come in at the lower end of market expectations as high mortgage rates weighed on affordability in a weak British housing market. Shares of the company were down 4% at 1404 GMT.

Nov 11 (Reuters) - Taylor Wimpey lowered its annual home completions forecast for a second time and said profit would likely come in at the lower end of market expectations as high mortgage rates weighed on affordability in a weak British housing market.

Home construction has struggled to rebound since the pandemic, and September marked the worst month for homebuilding in the UK this year, a much-watched survey showed last week, presenting a challenge to the government's goal to build 1.5 million new properties by 2029.

To preserve cash amid weak demand and Iran conflict-related cost pressures, Taylor Wimpey has reduced planned shareholder returns and tightened its land bank.

"The slow sales rates this year just means that the 2027 benefit from the sale of land bank is likely to be more muted than we previously anticipated," CFO Chris Carney told analysts in a call.

Taylor Wimpey now expects to complete 10,500 British homes this year, excluding joint ventures, with adjusted operating profit forecast at the lower end of the £262 million to £299 million ($350 million to $399 million) company-compiled consensus range.

CEO Jennie Daly said that loan repayment costs are pushing customers to take a "let's wait" approach.

Taylor Wimpey's order book excluding joint ventures fell to 6,839 homes as of November 8 from 7,253 a year earlier following subdued autumn trading.

House prices further softened and incentives to boost sales remained elevated, the company said, with the Bank of England's move to raise interest rates this month for the first time in over three years likely to further dampen consumer sentiment.

"Based on (Taylor Wimpey's) remarks and our understanding of the current house price conditions, we would expect the average sales price to fall year-on-year," Quilter analyst Oli Creasey said.

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