Taylor Wimpey reports 40% drop in orders

Housebuilder Taylor Wimpey said it expects no short-term improvement in the UK housing market, as it reported a 40% fall in orders compared with a year ago and net private reservations down 27%.

In an interim management statement for the three months from 1 July 2008, the firm said that conditions remained “extremely challenging”, with third-quarter mortgage approvals down 70% on last year.

Private reservations for the period averaged 165 per week, around 27% below the second half of 2007. The order book stands at 6,607 homes, compared with 11,074 homes in week 44 last year – a 40% drop.

The firm said its build rate is running at around 40% of normal levels and it has been forced to reduce headcount by 1,900 for the year to date.

In the US, the firm said that sales have fallen in recent weeks and it is suffering a higher level of cancellations but it expects a “modest profit” in the region for the full year.

Taylor Wimpey added that the lack of improvement in market conditions make it likely it will need to make further provisions against its land and work in progress.

In August, the company caused a stir with investors after saying it had yet to agree a crucial loan with its banks. The firm has said it expects resolution of its debt talks early next year.

The group said: “In the short term, our operational focus remains on cash management and cost reduction. We continue to believe that both the UK and north American housing markets remain attractive in the medium and long term due to the positive demographic trends in both markets, constrained land supply in the UK and the ability, in an improved market, to increase volumes profitably in the US.”