• Taylor Wimpey reported its profits plummeted by 45.8% to £349m in 2023
  • The firm finished building 10,848 homes, 23% fewer than the previous year 
  • Higher mortgage costs are dampening the volume of new home purchases

Taylor Wimpey’s earnings almost halved last year due to increasing building costs and a slump in new housing completions.

The housebuilding giant’s profits plummeted by 45.8 per cent to £349million in 2023 as it finished constructing 10,848 properties, 23 per cent fewer than the previous year.

While average selling prices of the FTSE 100 firm’s homes did rise by 5.1 per cent to £370,000, this was outpaced by underlying build cost inflation expanding by about 8.1 per cent.

Profitability: Taylor Wimpey's earnings nearly halved last year due to increasing building costs and a significant slump in new housing completions

Profitability: Taylor Wimpey’s earnings nearly halved last year due to increasing building costs and a significant slump in new housing completions

Taylor Wimpey expects to build even fewer houses this year – between 9,500 and 10,000, excluding joint ventures – because of challenging market conditions.

Britain’s home construction industry has been impacted by higher mortgage costs dampening the volume of new home purchases.

After spiking following former Liz Truss’s controversial mini-budget, mortgage rates eased somewhat at the start of 2023 but increased during the spring and summer owing to worse-than-expected inflation.

Housing sales have been further hit by rigid planning rules, the end of the Help to Buy scheme and considerable cost-of-living pressures.

As of 25 February, Taylor Wimpey’s order book stood at £1.95billion and 7,042 homes, compared to £2.15billion and 8,078 homes at the same point last year.

But while the Buckinghamshire-based group expects to construct fewer properties in 2024, it noted trading was showing ‘encouraging signs of improvement’.

Lower mortgage rates are improving affordability and confidence for consumers, leading to shrinking cancellation rates and a weekly net private sales rate of 0.67 per outlet so far this year, against 0.62 a year earlier.

Jennie Daly, chief executive of Taylor Wimpey, said: ‘It is still early in the year, and the macroeconomic backdrop remains uncertain; however, it is encouraging to see some signs of improvement in the market.

‘Looking ahead, we are well-positioned in an attractive market, with significant underlying demand for our quality homes and are poised for growth from 2025, assuming supportive market conditions.’

Taylor Wimpey’s annual results come two days after the UK competition regulator started a probe into the firm and seven other housebuilders amid allegations of sharing commercially sensitive information.

The Competition and Markets Authority (CMA) will look into whether new-build house prices are too high because some of the industry’s biggest operators are sharing non-public commercial knowledge.

As well as Taylor Wimpey, the CMA is investigating Barratt Developments, Bellway, Berkeley Group, Bloor Homes, Persimmon, Redrow, and Vistry.

It announced the new inquiry as it published a 12-month study into Britain’s housing market, which blamed the shortage of new homes on a ‘complex and unpredictable’ planning system and the limitations of private speculative development.

‘Any reforms to the current system would likely be a tailwind that benefits the whole sector,’ said Aarin Chiekrie, an equity analyst at Hargreaves Lansdown. 

Taylor Wimpey shares were 2.9 per cent lower at 136.45p just before midday on Wednesday, but have still grown by around 11 per cent over the past 12 months.


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