Taylor Wimpey is planning to cut jobs as the housebuilder warned of slowing sales in the latest sign of a downturn in the UK housing market.
The company said the job cuts formed part of efforts to save £20m in costs a year. The chief executive, Jennie Daly, declined to say how many of the 5,000 workforce would be affected, adding that staff consultations were under way.
The cuts would be a mix of redundancies and not filling vacant roles following recruitment freezes, as well as redeploying people within the business.
Taylor Wimpey started scaling back land purchases late last summer and estimates that it will complete 9,000 to 10,500 homes this year. That is a steep drop from last year’s 14,154 – and closer to the 9,609 it completed in the pandemic year of 2020 when the housing market temporarily ground to a halt following the Covid-19 outbreak.
Speaking at the start of the key spring selling season, the firm said its sales rate for private homes had fallen nearly 40% to 0.62 a week, compared with 1.02 a year ago. Between October and December the sales rate was even worse, dropping to 0.4%. “The quarter-four numbers and the early part of this year were more like the sorts of figures that we saw during the great financial crisis,” Daly said.
She pointed to the chaos unleashed in the mortgage market by Liz Truss’s disastrous mini-budget in September. Some fixed mortgage rates jumped above 6% in October, but have since come down to between 4% and 5%.
Taylor Wimpey’s order book at the end of February comprised 8,078 homes worth £2.2bn, down from 10,934 homes worth £2.9bn a year earlier. The cancellations rate climbed to 17% from 14%, as more customers decided not to go ahead with a house purchase.
Nationwide building society reported on Wednesday that annual house price growth turned negative in February for the first time in almost three years, and was the weakest rate since 2012. Housing experts are forecasting price declines between 5% and 20% this year.
That day, the Bank of England governor Andrew Bailey signalled that interest rates may have peaked after 10 successive rate rises which have taken its key rate to 4%.
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Taylor Wimpey managed to raise its prices in 2022 to an average £352,000 for a private home, offsetting an 8% rise in build costs, and made an annual pre-tax profit of £643.6m, up from £555.5m in 2021. Build cost inflation has since gone up to between 9% and 10%.
