aylor Wimpey reported bumper profits and said it expects sales to pick up for the rest of the year, even as signs of a slowdown in broader industry sales coincide with rising interest rates and a deepening cost of living crisis.
The developer reported a half-year pre-tax profit of £335 million, an increase of more than 16%. Its average private sale price hit £337,000 in the first half of the financial year, up 3.1%, a slight increase from 6.5% in the same period a year ago. Completed sales in the six months to July 3 came in at 6790, beating expectations. It forecasts a 4% to 5% increase in full-year completions.
But it may not be the easiest time to buy a home for the rest of 2022. Today, the company behind Your Move and Reeds Rains has new insight into the delays caused by shortage of carriers throughout the industry. LSL Property Services said the holdover on completion had resulted in a £1m operating loss in its estate agent operations and without them its underlying profits would have been higher. £6 million in the six months to June 30.
The lack of carriers, who play a key role in the sales process, came after the pandemic shut down the industry, creating a subsequent boom, after which many people left the profession, creating the shortage of qualified staff, while pent-up demand remains.
“We note that July personal selling rates were relatively low, but it is unclear if this is a seasonal issue,” said Oli Creasey, research analyst at Quilter Cheviot and chief investment officer at Taylor Wimpey’s. Or a sign of things to come. the numbers.
The slowdown in sales comes as the industry faces an 11 percent inflation forecast for the fall, as energy costs spike as homes burn with fireplaces and interest rates are likely to rise. That can make mortgages harder to negotiate, while buyers with a loan agreement take longer to complete the sale.
The Bank of England will raise rates again tomorrow. Some City forecasters expect a 0.50% increase, double the usual increase, which would put the rate that many mortgages are based on at 1.75%, much higher than historic low of 0.1% of the pandemic.
Data from Nationwide this week showed a drop in the number of mortgages approved in July, while overall prices rose 11% year-over-year, in line with the feeling that the strong home market is growing. faced some uncertainties.
Taylor Wimpey’s CEO, Jennie Daly, is optimistic about the company’s outlook: “Housing market fundamentals remain positive, supported by long-standing supply-demand imbalances and availability of attractively priced mortgages,” she said. “Our demand for homes remains strong.”
LSL also said its sales were “strong”.
On Wednesday, shares of Taylor Wimpey rose more than 4% to 125 points. LSL fell 2.2% to 317p.