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Taylor Wimpey has reduced its shareholder distribution policy and narrowed its UK home completions guidance as affordability concerns and economic uncertainty continue to affect the housing market. The company is slowing construction activity and reducing land acquisitions in response to weaker buyer demand. While it returned to profit during the first half compared to the previous year, it expects market conditions to remain challenging, with home prices staying below last year's levels and construction costs continuing to rise. The move reflects the cautious approach being adopted by major UK housebuilders.
Taylor Wimpey has reduced shareholder payouts and lowered its UK home completions target as affordability pressures and an uncertain economic environment continue to weigh on Britain's housing market. The announcement led to the company's shares falling by more than seven per cent.
The UK homebuilder said it has revised its shareholder distribution policy, reducing payouts to four per cent of net assets from the earlier 7.5 per cent. The company said the housing market slowdown has lasted longer than it had expected, with affordability challenges continuing to impact buyer demand and profitability remaining below the levels anticipated when the previous distribution policy was introduced.
The company also narrowed its full-year UK home completions guidance, excluding joint ventures, to between 10,600 and 10,800 homes, compared to its earlier estimate of 10,600 to 11,000 homes.
To align with current market conditions, Taylor Wimpey is slowing construction activity and acquiring fewer land plots as many homebuyers continue to postpone purchase decisions due to affordability concerns.
Britain's housing market has remained under pressure from elevated mortgage rates and persistent inflation over the past two years. More recently, rising energy and construction material costs, along with broader economic uncertainty linked to the conflict involving Iran, have added further pressure on both developers and buyers.
Taylor Wimpey's cautious strategy mirrors steps taken by several other major UK housebuilders. Companies such as Vistry and Berkeley have also reduced land acquisitions in recent months to preserve cash while market activity remains subdued.
The slowdown in construction across the sector has also raised concerns about the UK's housing supply. It comes after the country's Prime Minister ruled out changes to stamp duty, a decision that industry observers believe could make it more difficult for the government to achieve its target of delivering 1.5 million new homes by 2029.
Looking ahead, Taylor Wimpey said it expects market conditions to remain challenging. The company expects underlying home prices to remain below last year's levels and forecasts full-year build cost inflation of between three per cent and four per cent.
Despite the weaker market outlook, the company reported an improvement in its financial performance during the first half. Taylor Wimpey posted a pre-tax profit of GBP 116.8 million (USD 157.1 million) for the six months ended in late June, compared with a pre-tax loss of GBP 92.1 million in the corresponding period last year. The previous year's result had been affected by a substantial provision related to cladding remediation.
Source Reuters
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