The boss of one of the UK’s biggest housebuilders said that buoyant conditions in London and the South-east are spreading out across the rest of country as he reported a jump in total orders at Taylor Wimpey on Monday.
But Pete Redfern, the builder’s chief executive, also said that prospective housebuyers were more aware of the risks of taking on large debts and were exercising more caution this time around.
“Consumers are more aware of the risks now than in the 1980s and 1990s when they rushed into it fairly blindly,” he said. “They are being less gung-ho than in previous cycles.”
He also backed the Bank of England’s measures to prevent the housing market from overheating. Mr Redfern welcomed the “sensible” approach by the Bank’s Governor, Mark Carney, to managing the market through caps on mortgages at more than four and a half times household income.
“It’s not had a huge impact,” he said. “It takes slightly longer to get a mortgage for customers as they are going through more checks but we’ve been pretty disciplined.”
He added that the Government’s Help to Buy scheme, which aided the purchase of 42 per cent of the company’s private homes in the first half, had buoyed figures but it must be watched closely.
“Any incentives need to be carefully managed and hopefully it will be tapered off over time,” he said.
Taylor Wimpey’s sales were at the upper end of expectations ahead of its first-half results later this month.
The company expects to fatten margins compared with the same period last year, while the average selling price of completed houses increased 9.6 per cent to £206,000 from £188,000 in 2013.
Total orders stand at £1.58bn as of 29 June, well ahead of last year’s £1.26bn. The business counts 10 per cent of its business within the M25 and 25 per cent across the Home Counties.
Analysts at its house broker Jefferies, inspired by the World Cup, said: “At half time there is no nervousness or need for a strong pep talk from team boss Redfern.
“His players are following the game plan and leaving little to chance, having set the bar high with respect to value vs volume, they have left Persimmon with a lot to do in the second half and we suspect that nerves on the Barratt bench are high.
“We expect significant value growth in the coming seasons as the heads on those legs mature and as the investments in strategic land start to really make their presence felt on the pitch.”
Analysts at Deutsche Bank said the trading update was “reassuring” and forecast Taylor Wimpey’s acquisition of premium land would begin to pay off in the next two years.