Uncertainty over the UK general election has not stopped people’s desire to buy houses, according to Taylor Wimpey.
Ahead of its annual meeting, the housebuilder said it had seen a strong start to the spring selling season, helped by cheaper borrowing costs and a stronger economy. Chief executive Pete Redfern said:
During the first four months of 2015 we have seen the UK housing market continue to grow, with increasingly competitive mortgages and secure employment prospects underpinning homebuyers’ confidence.
On the outlook the company said:
The uncertainty surrounding the general election outcome has not impacted customer confidence, and underlying demand remains strong.
As at 19 April 2015 we are 67% forward sold for 2015 completions, positioning us well for the remainder of the year and beyond.
Taylor Wimpey’s shares are virtually unchanged, down 0.2p at 164.1p. But analysts were positive. Robin Hardy at Shore Capital said:
The order book at £1.9bn is ahead 12% on last year which broadly tracks our expected revenue rose for the year of 15%: order books in the first quarter are not a reliable guide as they are heavily skewed by social housing contracts. Social housing orders account for the large step up in orders since January 1. Comments on the land market indicate that the climate there is still very favourable but Taylor Wimpey has already reached its optimum land holding position and is now only replacing land consumed rather expanding.
A different slant on the election from Persimmon (they commented on planning delays) saying that there has been broadly no impact.
As have almost all other stocks in the sector, Taylor Wimpey has reached our current target price of 160p but we are happy to remain at buy as we still believe that we are entering a ratings upgrade cycle that has the scope to push fair value estimates up by 15-20%. So, still a positive macro outlook, likely upwards revision of fair value and still yielding around 7%.
Liberum said:
Its private selling price has risen by 14% since last year, to £283,000, which compares to our full year forecast of £260,000, we will need to check that there is no London bias in first few months of the year, but otherwise our estimates start to look very conservative.
And Jefferies commented:
Taylor Wimpey has seen a strong first quarter and so far the election has not led to a reduction in demand. With Help to Buy running very smoothly and cross party political consensus that we need more houses, the electorate are currently voting with their feet and buying houses.
