Taylor Wimpey eyes price increases as market improves

Taylor Wimpey has announced that it is focusing is on building its 2010 order book and achieving price increases.

In an interim management statement released today, the group said this decision was in response to improved market conditions.

It said: “The continuation of improved market conditions into the autumn selling season has been reassuring, although sustaining the current recovery will be dependent on improvements in mortgage availability and the wider economy. Our operational focus remains on build cost reduction and achieving sales price increases as we build our order book for 2010.”

The group added it is fully sold for 2009. In the second half of 2008, net private reservation rates were at 0.40 homes per site per week compared to 0.56 this year. These reservation rates include the effect of cancellations, which remain low at 16% for the second half to date, which compares with 46% in the same period last year.

The average selling price for homes was up 9% on prices in the first half of 2009. The rise has been put down to the group's decision to move away from apartments to more housing, twinned with a rise in prices over the past three months. The group's order book is worth £1bn.

Although land deal rates remain low in the recession, Taylor Wimpey said it has still approved new land purchase commitments for 1,011 plots at eight new sites since the first half of 2009.

In the US, the group said that for the remainder of 2009 the state of its order book was in line to deliver its expectations for full year completions at US$0.95bn (week 43 2008: US$1.21bn). It added that pricing has remained flat against the first half average of US$275k.

Taylor Wimpey's overall net debt now stands at c£860m, down from £1.87bn this time last year. The group anticipates a further reduction by the end of the year, bringing the group's total debt to below £800m before 2010. This is “despite our decision to accelerate significant cash commitments forward from early 2010”.