Both developers see stabilising of sales rates so far this year
Volume housebuilders Taylor Wimpey and Persimmon both published trading statements this week, warning of a fall in forecast completions in 2023.
However, both developers have also reported a stabilising of sales rate when compared to the challenges experienced at the end of last year.
In a statement covering the year to date, Taylor Wimpey said its net private sales rate in the period (including bulk sales) was 0.75 per outlet per week (2022: 0.97), with a cancellation rate of 15% (2022: 14%).
The firm also anticipates completions for the year to be in the region of 9,000 to 10,500, compared to 14,154 in 2022.
We have seen continued recovery in demand from the low levels experienced towards the end of 2022, supported by good mortgage availability, and have seen an incremental improvement in sales rate as the spring selling season has progressed.
Jennie Daly, CEO, Taylor WImpey
Meanwhile, Persimmon has reported a “steady improvement” in sales rates in Q1 2023, reaching 0.62 (Q1 2022: 0.98). In Q4 2022, the sales rate was 0.30.
Reporting a 42% reduction in completions in Q1 2023 when compared to the same period last year, the firm predicts completions this year to reach around 9,000 (2022: 14,868).
While interest remains good for all our homes, sales to first-time buyers remain more challenging, reflecting stretched affordability and reduced mortgage availability at higher loan-to values, particularly in regions with higher house prices.
Dean Finch, Group Chief Executive, Persimmon
Persimmon also announced a substantial investment of £25m in modular building start-up TopHat.
The firm intends to use TopHat’s manufacturing to support its existing Space4 timber frame product.
TopHat was founded in 2016 and aims to reach a production capacity of over 4,500 units a year. In the past 18 months it has raised £300m from shareholders.
House price increase in April is lower than usual
Average property prices in the UK increased by just 0.2% in April when compared to the previous month, according to Rightmove.
The property website also reported that this is “notably lower” than the average increase of 1.2% for this time of year, with a typical UK property now valued at £366,247.
Rightmove also found that agreed sales are now in line with pre-pandemic levels – led by the first-time buyer sector, with sales of two-bed homes or fewer up by 4% when compared to March 2019.
HMRC transactions rise in March, but fall against 2022
Latest government data has estimated that the provisional seasonally adjusted number of UK residential transactions in March 2023 totaled 89,560.
The estimate from HMRC is 1.3% higher than February, but -18.9% lower than March 2022.
Merchant sales reveal slow start to 2023
The latest Builders Merchant Builders Index (BMBI) report reveals that the value of builders’ merchant sales increased by 0.8% over the year in February 2023; but the volume of product fell by 12.2% when compared to February 2022.
However, sales volumes were up by 13.4% in February when compared to the previous month.
Mike Rigby, CEO of MRA Research – the firm who produces this report – described the market as “teetering between still rapidly rising prices and falling volumes”.
It’s a strange time with the economy caught between a government pleased to welcome growth and a central bank keen to discourage it in its battle against inflation.
Mike Rigby, CEO, MRA research
Meanwhile, the Construction Products Association’s (CPA) latest State of Trade Survey for Q1 2023 has revealed a fall in heavy-side materials for a third consecutive quarter, but continued growth for manufacturers on the light side.
CPA’s economists have suggested that the poor performance of heavy product sales, such as bricks, concrete and aggregate, is down to the heavy rain experienced in January and March.
In terms of the economy, there was greater stability in Q1 following the post-mini budget turmoil at the end of 2022, which has improved manufacturers’ views for the 12 months ahead.
Rebecca Larkin, Head of Construction Research, CPA
The split in fortunes across construction is likely to continue, however, with housing and other consumer-focused sectors set for a struggle against a backdrop of falling real incomes and interest rate rises, whereas larger-scale refurbishment activity continues to be driven by energy efficiency considerations and new models of hybrid home-office working.
Housing View 