Housebuilders downbeat on prospect for UK market

Two of Britain's biggest housebuilders warned yesterday they saw no prospect of an upturn in the UK housing market this year, despite last month's cut in interest rates.

Taylor Woodrow and Wimpey said they were looking instead to overseas markets to provide profitable growth. The two companies have extensive operations in the US, and Taylor Woodrow has a presence in Spain.

Reporting a 3 per cent decline in first-half profits to £170m, Iain Napier, the chief executive of Taylor Woodrow, said he did not expect to see an improvement in the UK housing market until the spring. Peter Johnson, his opposite number at Wimpey, said it was too early to say whether an upturn would come by then, although the outlook was not as poor as it had been earlier this year. Wimpey's first-half profits were down by 21 per cent.

Nearly half of Taylor Woodrow's profits come from overseas, helping offset the decline in the UK market. In the six months to the end of June, UK housebuilding profits fell 18 per cent but profits from the US and Spain grew by 38 and 47 per cent.

Wimpey's first-half profit decline would have been greater but for a 69 per cent increase in US earnings, which helped offset a 33 per cent decline in the contribution from UK housebuilding.

Mr Napier said Taylor Woodrow was already sold out for this year in the US where prices are rising by 10 per cent. In the UK, prices have remained flat, taking into account the increased amount of social housing the company completed in the first half. While reservations on new homes in the UK were up by 5 per cent in July and August, that was not necessarily a reliable guide for the rest of the year.

Taylor Woodrow said its housing order book, at £1.6bn, and its housing land bank, at slightly less than 75,000 plots, stood at record levels. However, the company took a sideswipe at the UK's planning regulations which prevented enough new homes being built even though the country had the oldest housing stock in Europe.