House builder Taylor Wimpey has reported significant improvement in the housing market underpinned by increasing consumer confidence and government interventions to bolster homeownership.
Average selling prices on private completions rose by seven per cent to £210,000. Taylor Wimpey's overall average selling price has also increased by 6 per cent to £191,000. The company expects to be able to deliver further increases in the number of completions and average selling prices in 2014 and remain confident of driving an improvement of 200 to 300 percentage points to operating margin in 2014.
Total home completions increased by seven per cent to 11,696 up from 10,886 in 2012. The government's Help to Buy scheme continues to prove popular with first time buyers, with the company reporting over 2,900 households using the initiative to get their first step on the housing ladder.
Pete Redfern, Chief Executive, commented:
We saw a meaningful step change in market conditions in 2013, after several years of a declining or flat market. In these improving conditions, Taylor Wimpey is benefitting from the discipline that has been instilled over the past five years with a clear focus on margin as the best measure of the quality of our business. Focussing on the long term health of the business allows us to take the right decisions today to deliver much needed homes all the way through the housing cycle.
Earlier this week, Deutsche Bank forecast continuing success for the company.
Glynis Johnson, analyst at Deutsche Bank, said:
Over the coming 12-24 months with the increased contribution of new and strategic land we see strong improvement in ROCE at Taylor Wimpey to 20 per cent and beyond by 2015. This combined with the strong yield and confidence on land discipline that the cash returns anticipated upside ought to bring, we see driving further strong momentum for the stock.