Taylor Wimpey hit by tough market conditions

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by Kay Murchie

Housebuilder Taylor Wimpey, the group formed by the merger of Taylor Woodrow and George Wimpey last July, announced losses of £19.5 million compared with £405 million the year before.

Britain’s second-largest builder said it is faced with problems in the UK and in the US and said its forward orders fell 19%.

The group, which announced a £750 million share buyback last July and has since repurchased £250 million of shares, said it had decided to suspend the program ‘temporarily until conditions improve‘.

The average price of its homes declined from £202,000 to £175,000 in America and the group was forced to write down £283 million on the value of land and property developments in the US.

In the UK, the number of prospective buyers visiting its showrooms and the reservations it is taking are down by between a quarter and a third compared with a year ago.

Pete Redfern, the group’s chief executive, predicts that prices will stagnate this year. We wouldn’t expect prices to grow materially this year. We anticipate that the current subdued conditions will continue, with interest rates and mortgage availability being key determinants of customer confidence, added Mr Redfern.

There’s no doubt the UK market is more subdued and it’s going to be quite a challenging year, concluded Mr Redfern.

Last week, housebuilder Redrow posted a 35% fall in half-year pre-tax profits and said the markets in which it operates remained ‘clearly’ challenging.

However, in contrast, housebuilders Persimmon posted record profits for last year while Barratt Developments said half-year, pre-tax profits increased by 10% to £194.6 million.