Taylor Wimpey trading update reports house prices flat

House prices remain “flat” says Taylor Wimpey in a trading update this morning

TW adds a note of optimism, however, by saying that “the situation is beginning to improve”.

The house builder will issue full details of the half-year financial results (for the period ending 30 June) on 5 August.

Pete Redfern, chief executive, said: “We have strengthened our financial position having agreed the restructuring of our debt facilities.” Additionally TW has been to the City and raised £510m of new funds.

As a result, net debt at the end of the period is a mere £1bn which the group finds much more comfortable that then £1.7bn burden at the start of the year.

Management thinks that net debt will be reduced at the full-year.

Apart from some regional variations, TW reports “continued stability in the UK housing market since we reported our full year results on 30 April”.

The net private reservation rate remains at around 0.6 per site per week, with prices broadly flat and cancellation rates below the long run average.

Mortgage valuations and availability are still issues, but “there are signs that the situation is beginning to improve”.

However, TW adds that it expects to see the normal seasonal slowdown over the summer months.

The level of unsold completed homes remains “tightly controlled” and we expect to see an increase in the average selling price of completions in the second-half as a result of planned mix changes.

The order book stands at £970m, an increase of 73% from the year end position of £560m, “which represents good progress in the current market conditions”.

TW is operating from 340 outlets (start of 2009: 390). 

If the current market stability is sustained into the autumn selling season, TW will look to increase the number of outlet openings during the second-half.

Redfern said: “Opportunities are starting to emerge to purchase good quality land at prices that should be value creating for Taylor Wimpey.

TW has made some “ordinary course of business” land sales during the first half of the year at values close to written down levels.

In a curious final note TW comments “we will be undertaking a further review of our land values as part of our half-year process”.