Home Money Taylor Wimpey warns of higher construction costs amid weak economy

Taylor Wimpey warns of higher construction costs amid weak economy

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Caution: Taylor Wimpey has warned of increased pressures on construction costs following the recent budget and weak economic conditions.
  • Taylor Wimpey finished last year with an order book worth almost £2bn.
  • The firm said it is ‘well placed’ to achieve volume growth in 2025

Taylor Wimpey has flagged increased pressures on construction costs amid the disruption to the Autumn Budget and weakened 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 said it was “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 percent, as inflation picked up in the second half amid higher energy prices and fuels.

Mortgage rates are falling to more affordable levels, although the best rates remain above 4 percent for now.

This has spurred a recovery in residential prices and transactions.

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

Caution: Taylor Wimpey has warned of increased pressures on construction costs following the recent budget and weak economic conditions.

Jennie Daly, its chief executive, said: “We enter 2025 with a strong order book and land position, supported by a strong balance sheet and highly experienced teams, positioning us well for volume growth.”

The FTSE 100 company completed 10,593 properties last year, slightly fewer than the 10,848 completed 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 sales price of privately completed homes in the UK fell by £14,000 to £356,000 following the fall in prices across the south of England in the second half of 2025.

In comparison, the average sales price of one of its new-build Spanish properties increased 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 sharp share price fall in the final months of 2024, as the UK budget, rigid rates mortgages and economic fears weighed on the entire sector.

‘With the current economic uncertainty, there are likely to be many ups and downs in the short term.

“But for investors looking for exposure to the sector at an attractive valuation and a good income stream while waiting for a recovery, Taylor Wimpey looks like a good choice.”

taylor wimpey actions They were down 3.7 per cent to 110.15p on Thursday morning and have fallen around 30 per cent in the last six months.

Taylor Wimpey’s results come a day after Vistry Group warned of “uncertain” market conditions and an estimated £5m cost rise this year due to rising NI rates.

From April, employer contributions to NI will increase from 13.8 per cent for annual staff salaries over £9,100 to 15 per cent for salaries over £5,000.

At the same time, the national living wage will rise by 6.7 per cent to £12.21 an hour, while the national living wage for 18-20 year olds will rise by 16.3 per cent to £10 an hour.

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