- Housebuilder warns of higher input costs and weaker pricing
- Analysts likely to trim profit forecasts, even in the absence of a formal profit warning
- Company responds with plan to cut land purchases
- Share price slides to lowest mark since February 2013
- Stock now trades at very large discount to book value per share
“Weaker prices, especially in the South of England, and rising input costs are the latest bricks to drop on the foot of housebuilder Taylor Wimpey, whose shares now languish at levels last seen in spring 2013, just before then Chancellor of the Exchequer George Osborne launched the Help to Buy scheme,” says AJ Bell investment director Russ Mould.
“The Help to Buy profits boom is well and truly over, and Taylor Wimpey is responding to the combination of modest demand, higher costs, and tighter regulation by following the example of Barratt Redrow and Berkeley and reducing land purchases, a move which does not smack of maximum confidence in the outlook.
Source: LSEG Refinitiv data
“Taylor Wimpey’s first-quarter update offers little more cheer than the commentary provided by Berkeley Group in March and Barratt Redrow earlier this month, respectively. Both of those builders announced reductions in land buying in response to more difficult trading conditions and Taylor Wimpey has followed their lead.
“So far in 2026, the FTSE 250 index member has bought just 1,000 plots of land compared to 1,700 at the same stage one year ago. As a result of that, and new completions, the total near-term landbank has dipped slightly this year, to around 76,000 plots, down from 76,772 in December. This all suggests Taylor Wimpey is not expecting a big jump in demand or completions, especially if the Bank of England feels unable to cut interest rates thanks to higher energy prices, and their potential knock-on effects.
Source: Company accounts
“Chief executive Jennie Daly’s admission about falling prices is also a warning that demand is not living up to expectations.
“Overall prices in the company’s order book are down by around 1% on a year ago. This is a huge contrast to the upward march of the 2010s when Help to Buy meant that supply could not keep up with demand, to the great benefit of the builder’s profit margins.
“Worse, Taylor Wimpey notes an acceleration in input cost increases. March’s full-year results statement for 2025 flagged low single digit percentage cost inflation for 2026. The latest update points to low-to-mid-single digit percentage increases.
“The builder does not overtly step away from its prior guidance of an annual operating profit of £400 million for 2026, but the combination of weaker prices and stronger cost pressures must surely leave profit margins exposed on the downside.
“Talk of a double-digit operating margin for 2026 now looks fanciful, and Taylor Wimpey’s scrimping on land purchases implies slower completion growth and is thus a further obstacle to the Labour Government’s housebuilding targets.
Source: Company accounts, Marketscreener, analysts' consensus forecasts
“Jennie Daly and team are sticking with the £52 million share buyback programme planned for this year, which is already two-thirds complete.
Source: Company accounts, Marketscreener, analysts' consensus forecasts
“This is supported by a net-cash balance sheet and makes sense in the context of the stock’s lowly valuation.
“Taylor Wimpey now trades on just 0.7 times historic tangible net asset value per share, so house and land prices would have to fall an awfully long way for that multiple to reach 1.0 times. A buyback effectively means Taylor Wimpey is buying £1 of assets for 69p, although some shareholders may look nervously at the dividend yield, which looks very high at more than 9%, even allowing for the net cash pile.”
Source: Company accounts, LSEG Refinitiv data, Marketscreener, consensus analysts’ forecasts
