Taylor Wimpey has joined rival housebuilder Persimmon in sounding the alarm over the slowing housing market and rising mortgage rates.
The FTSE 100-listed firm reported that the volume of private house sales had reduced by nearly half in the second half of the year so far, compared with 2021.
It said that the slowdown reflected customers reacting to the “heightened levels of economic uncertainty”, with higher mortgage rates set to add to wider cost-of-living pressures they are facing.
It also saw just under a quarter of sales cancelled before completion in the second half of the year to date.
This compares with the 14% cancellation rate in the same period last year, indicating that people have been more likely to pull out of purchases recently amid tougher selling conditions.
On Tuesday, rival housebuilder Persimmon revealed that customer cancellations had ramped up to 28% in the past six weeks.
Rising interest rates and economic uncertainty was “clearly” impacting mortgage lending and the behaviour of customers, it said.
Taylor Wimpey highlighted that where customers had been able to lock in mortgage rates, they remain keen to complete their purchase.
It also stuck by its previous profit guidance, maintaining that the business is “agile” and on a strong financial footing to weather the storms ahead.
Jennie Daly, chief executive of Taylor Wimpey, said: “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.”
The housebuilding giant expects to bring in operating profits, excluding exceptional items, of £922 million for the full year.
It also reported its current order book, not including joint ventures, stands at around £2.6 billion, though that is less than the £2.8 billion it had in forward sales last year.
Shares in Taylor Wimpey were relatively stable on Wednesday morning, but the firm has seen its share price plunge by about a half over the past five years.
Russ Mould, investment director at AJ Bell said: “Anyone who read Persimmon’s update yesterday would have been in no doubt about what to expect from its housebuilding peer Taylor Wimpey.
“It’s something of a miracle that it has taken this long for housebuilders like Taylor Wimpey to feel this kind of pain.
“Cost-of-living pressures have been mounting for some time, mortgage rates were already bubbling higher before the mini-budget which really brought them to the boil and the cost of raw materials and labour have been going up.”