Taylor Wimpey warns of upper construct prices amid weak financial system

Taylor Wimpey has flagged greater building cost pressures amid the disruption of the Autumn Budget and subdued economic output.

The Buckinghamshire-based housebuilder said suppliers were trying to determine the impacts of the October Budget, which included increases to National Insurance rates and the National Living Wage.

It claimed to be ‘well placed’ to achieve volume growth in 2025 thanks to its current order book, although this would depend on the trajectory of mortgage rates and their impact on affordability.

The Bank of England made just two base rate reductions last year of 25 basis points each, taking the rate to 4.75 per cent, as inflation rebounded in the second half amid higher energy and fuel prices.

Mortgage rates are falling to more affordable levels, though the best rates remain above 4 per cent for the time being.

This has stimulated a recovery in residential prices and transactions.

Nonetheless, Taylor Wimpey ended 2024 with an order book of 7,312 homes worth nearly £2billion, compared to 6,999 properties valued at £1.77billion in December 2023.

Caution: Taylor Wimpey has warned of greater building cost pressures following the recent Budget and subdued economic conditions

Jennie Daly, its chief executive, said: ‘We enter 2025 with a strong order book and land position, underpinned by a robust balance sheet and highly experienced teams, which positions us well to deliver volume growth.’

The FTSE 100 company completed 10,593 properties last year, slightly down on the 10,848 finished over the previous 12 months.

But excluding joint ventures, it built 9,972 properties in the UK, which was at the top end of its guidance range.

Taylor Wimpey revealed that the average selling price on privately-completed UK homes fell by £14,000 to £356,000 following weaker pricing across the South of England in the second half of 2025.

By comparison, the average sale price of one of its newly-built Spanish properties jumped by €40,000 to €440,000, although it only completed 504 of them during the year.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: ‘Taylor Wimpey remains on solid ground, despite a steep share price decline in the final months of 2024 as the UK Budget, sticky mortgage rates and economic fears weighed on the whole sector.

‘With the current economic uncertainty, there’s likely to be plenty of ups and downs in the short term.

‘But for investors looking for exposure to the sector at an attractive valuation and a nice income stream while they wait for a recovery, Taylor Wimpey looks like a strong choice.’

Taylor Wimpey shares were 3.7 per cent lower at 110.15p on Thursday morning and have slumped by around 30 per cent over the past six months.

Taylor Wimpey’s results come a day after Vistry Group warned of ‘uncertain’ market conditions and an estimated £5million cost hike this year from increased NI rates.

From April, employers’ NI contributions will go up from 13.8 per cent on annual staff salaries above £9,100 to 15 per cent on wages exceeding £5,000.

Concurrently, the National Living Wage will expand by 6.7 per cent to £12.21 per hour, while the National Minimum Wage for 18 to 20-year-olds will climb by 16.3 per cent to £10 per hour.