Taylor Woodrow alert hits housebuilders

Taylor Woodrow, the leading housebuilder, said yesterday that profits would miss the more bullish expectations in the City due to a dip in the new homes market.

Taylor Woodrow, the leading housebuilder, said yesterday that profits would miss the more bullish expectations in the City due to a dip in the new homes market.

The company said that visitor numbers to its sites fell by 10 per cent in the second half, as reservations per site dropped to "significantly below" the same period in 2003.

Iain Napier, the chief executive, blamed the recent dent in consumer confidence, which, he said, had been knocked by interest rate rises and "scare stories" in the media.

"People are being very slow in converting interest into firm sales. They are waiting to see what will happen to interest rates and whether prices will come down," Mr Napier said.

Separately, a website that advertises new homes for sale, SmartNewHomes.com, said that the average price of a new home in the UK ended last year at £266,380. Its survey showed that the price of a new home finished the year roughly where it started - while the summer was strong, the final quarter brought price levels back down again.

David Bexon, the chief executive of SmartNewHomes, said: "With interest rates still relatively low and employment high, there is very little chance of a drastic drop in prices [in 2005]. Instead, the new homes market is likely to see continued steady growth of 2 to 4 per cent over the year."

Taylor Woodrow did see price growth last year, of 9 per cent, but Mr Napier said he expected that to slow this year to 2 or 3 per cent. The company will market a smaller number of new sites in the first half of this year, bringing on more stock in the second half, when demand should pick up, he said.

The company, which had put out an alert on the state of the market in October, said 2004 pre-profits would come in at the lower end of expectations, pointing to a figure of around £388m. Mr Napier said that, unlike most of its UK rivals, Taylor Woodrow had a sizeable business in the US, where conditions remained buoyant.