The company and its rivals are benefiting from a shortage of supply of new homes in Britain even though the economic climate is bleak with the economy back in recession.
If these stable market conditions continue, the group expects to continue posting a better performance with full year returns in 2012 that are ahead of cost of capital and in line with expectations.
‘We think it is most likely that the current conditions will continue, but that doesn't mean it's certain,’ said Pete Redfern, chief executive of Taylor Wimpey, Britain's second biggest house builder by volume.
The major risks were from outside the UK housing market, and mainly to do with the banking system, he said, adding that those risks had existed for some years without having a significant impact on the market. ‘We like everybody else will watch what's happening in southern Europe, with the impact on the banking system, closely,’ Redfern added.
Taylor Wimpey's order book grew to £960 million as of 01 July, up from £932 million a year earlier. Redfern said that if conditions remained broadly stable, he was happy with a consensus of analyst forecasts that put full year operating profit at around £207 million, about 30% higher year on year.
The group completed 5,083 homes in the first half, up from 4,707 in the first half of 2011, with the overall average selling price of the completions increasing to £175,000 from £168,000.
Tightness in supply offsets the difficulty buyers face in securing mortgages, Redfern said and added that the company was continuing to buy land when it could do so at attractive return levels.
In Spain, where the group has a smaller operation, market conditions remained challenging. It completed just 13 houses in the first half, at an average selling price of £172,000, down from 30 in the first half of 2011 at an average price of £266,000.
Redfern said the group would probably make a small profit in Spain this year, but was not adding to its asset base there. He said in the short term the aim was to generate some cash and recover some of the value of the land. ‘It's obviously not a market we would enter today,’ he explained.
Fellow house builder Gleeson also said its order book had increased, up 18% to £10.8 million pounds. While Persimmon, Britain's biggest house builder by market value said it had made an excellent start to its new strategic plan, completing 4,712 new homes in the first six months of 2012, a 6% increase year on year. It said market conditions had been relatively stable.
