Major housebuilder says cost inflation is expected to fall next year

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Taylor Wimpey has reported it expects building cost inflation to fall next year from the five per cent increase seen in 2015…

According to a trading statement, major housebuilding firm Taylor Wimpey said it has seen a 23 per cent increase in its order book compared to last year. This took the total to a record £2.1bn, and saw the number of homes rise from 7,814 to 8,546.

Additionally, the firm said it had seen sales rates for the year to date increase ahead of last year. Figures rose from 0.66 sales per outlet during the same period in 2014, to 0.76 this year. This rise was attributed to strong sales in the second quarter, which continued through the summer and into the autumn.

The statement also said cost inflation, which had been driven by labour increase, had reached its peak and would be offset by house prices in the future.

Chief executive Pete Redfern said: “The forward pressure on build costs has stabilised and, at this point, we expect to see a slightly reduced level of build cost increase during 2016 to that experienced in 2015 as more capacity returns to the sector, including through our apprentice, management and graduate trainee schemes.

“We have seen an excellent summer selling season strengthen further in the autumn period, with customer confidence high and demand underpinned by rising real wages and good access to a wide range of mortgage products.

“Against this backdrop, we are reporting record order book levels and expect to deliver an improvement in operating profit margin of over 200 basis points in 2015 and a return on net operating assets of over 25 per cent.

“As we look forward, we are particularly pleased to see that the tighter lending requirements are helping to ensure that monthly payments remain affordable and sustainable, which contributes towards a healthy outlook for both homebuyers and homebuilders.”

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