Taylor Wimpey sees no prospect of recovery in the short term

Housebuilder has shed 1,900 jobs as orders fall and cancellations rise
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The Independent Online

Taylor Wimpey has now shed 1,900 workers this year as it tries to cope with a disastrous downturn in the housing market. The figure, revealed by the housebuilder yesterday, is more than twice its previously announced job losses, which totalled 900 at the end of July.

Despite cutting prices and offering unprecedented sales incentives, Taylor Wimpey's sales have slowed further in the second half of the year, with net reservations down to 165 a week, 27 per cent less than in the same period of 2007. The actual sales figure is higher, but the housebuilder warned it was continuing to suffer from "above normal" levels of cancellations. Taylor Wimpey's order book stood at 6,607 homes at the end of October, 40 per cent down on the same week last year.

Pete Redfern, chief executive, said there was little prospect of improvement in trading in the short term and warned that the company may yet have to further write down the value of its land and incomplete building projects.

Taylor Wimpey's shares slipped 19 per cent to 10.75p yesterday amid continuing concerns about its £1.9bn of debt. The company said it had not breached its banking covenants, but talks over refinancing are continuing, with no deal reached yet.

Like other housebuilders, Taylor Wimpey has welcomed government initiatives designed to boost the market, such as the extension of the threshold at which stamp duty on home purchases becomes payable from £125,000 to £175,000. It is also hoping that last week's 1.5 percentage point interest rate cut from the Bank of England will boost confidence. However, question-marks remain over the availability of mortgage finance, and figures published yesterday by the Council of Mortgage Lenders suggested that the stamp duty concession, which is available for a year, had not provided a significant uplift. While the number of homebuyers not paying stamp duty on purchases in September had doubled compared with the same month last year, the number of mortgages taken out for house purchase hit a record low of 35,000, the CML said. That was 15 per cent fewer than in August and less than half last September's total of 80,000.

Property experts say buyers are staying out of the market in the expectation of further house price falls.

The Department for Communities and Local Government said yesterday that prices across the UK fell by an average of 5.1 per cent over the year to the end of September, though its figures, which are based on completions, tend to lag indicators such as the Halifax and Nationwide indices by several months.