Taylor Wimpey sees lower profit margins amid return of inflation
The house builder said it had seen ‘the return of a low level of build cost inflation’ in the opening months of this year.
Taylor Wimpey has said it expects lower profit margins in the first half of 2025, amid lower selling prices and rising inflation for construction firms.
The house builder said on Wednesday that operating margins will likely be lower than 2024’s figure of 11% for the first half of the year.
It said underlying pricing in its order book at the start of the year was slightly lower than the 12 months previous, while it also cited “the return of a low level of build cost inflation”.
Nonetheless, Taylor Wimpey said it is still on course to build up to 10,800 homes this year, as previously forecast.
That is up on the previous year, when it fell just short of the 10,000 mark last year, but still well behind the roughly 14,000 four years ago.
Chief executive Jennie Daly said that while the Government’s recent planning reforms are “positive”, they would require more resources to make them work.
England’s planning system has long been criticised for making it too easy to reject applications to build homes, and as a hurdle to fighting the chronic shortage of housing across the country.
Labour’s changes include hiking approvals targets for local authorities and making it easier to build on parts of the greenbelt.
Sir Keir Starmer has said he wants to end a “challenge culture” on infrastructure projects, including new homes.
Meanwhile, Taylor Wimpey said it is “continuing to see good quality customer interest” despite recent economic volatility and “ongoing affordability challenges”.
As of April 27, its total order book stood at £2.3 billion, compared with £2.1 billion the previous year, representing 8,153 home, up from 7,742 homes at the same point in 2024.
Ms Daly said: “The spring selling season has progressed in line with expectations, with good levels of customer demand reflected in our sales rate.
“Notwithstanding the wider macroeconomic backdrop, affordability is improving with lenders remaining committed to the housing market, albeit first time buyers continue to experience some challenges.
“Planning reforms are positive, but these do require increased resources and a focus on the implementation phase to drive outcomes and deliver much-needed new homes across the country.
“Looking ahead, we operate in an attractive market with significant underlying demand for new homes.
“With our strong, high-quality landbank, healthy balance sheet and highly experienced teams, Taylor Wimpey is set to deliver sustained growth and value for all our stakeholders.”