Construction company Taylor Wimpey (TW.L) reported a fall in its sales rate alongside a spike in cancellations as the mounting cost-of-living crisis is forcing the housing market to contract.
Due to shrinking demand for new homes in the UK, Taylor Wimpey announced in its trading report on Wednesday that it plans to build fewer homes this year.
The construction company is factoring in reduced demand due to a spike in mortgage rates that has slashed the purchasing power of would-be homebuyers.
The High Wycombe-based company said that on the back of a total order book of £2.6bn, it expects its 2022 full-year operating profit to be about £922m.
Taylor Wimpey added that it now expects its 2022 sales volume to be broadly similar to that of 2021 and that it will still deliver an operating profit in line with company-compiled market expectations.
On Wednesday morning, shares in the housebuilder traded flat in London. Standing at 95.42p as of the time of writing, Taylor Wimpey shares were down 0.56% in the past 24 hours.
Taylor Wimpey CEO Jennie Daly commented: “In a challenging economic and political backdrop we are performing well and are on track to deliver full-year operating profit in line with market expectations.
"While sales rates have been impacted by wider economic uncertainty, we continue to see good levels of customer interest in our homes and a desire to get onto or move up the housing ladder.
"Taylor Wimpey is an agile business and we have been focused on operational efficiency and execution.
"We operate from a position of financial strength and as we continue to navigate the current macro-economic challenges, our quality landbank in customers’ preferred locations positions us well.
"We will continue to manage the business with discipline as we seek to deliver value for all our stakeholders.”
According to a report by building society Halifax, house prices fell in the UK in October by 0.4%.
The drop came after Liz Truss’s mini-budget drove a sudden rise in mortgage rates, which saw a decline in the average price of a house in the UK to £292,598.
Halifax noted that this was the steepest drop since February 2021 and that the annual rate of growth in house prices slowed to 8.3% in October from 9.8% in September.
Watch: It's too late' to use crypto as hedge against collapsing fiat currencies, says BitBoy Crypto | The Crypto Mile