Resilient housing market bolsters Taylor Wimpey

SHARES in housebuilder Taylor Wimpey rose after the firm said it expects UK sales to remain ‘robust’ this year.

In a bullish trading update, the company said it was on track to report a £293m annual operating profit after a strong finish to 2020.

That is down from £850.5m in 2019, after a temporary shutdown of the housing market in the spring sent the firm’s completed sales for the year tumbling 39pc to 9,609.

But Taylor Wimpey said sales had bounced back in the second half, with the company boasting an order book of agreed sales worth £2.7bn.

And it said interest levels ‘remain good’ despite current lockdown restrictions, adding that the market looked ‘robust’ despite some economic uncertainty.

In another sign the firm is betting on continued demand, it has gone on a £1.3bn land-buying spree to provide for future projects.

Taylor Wimpey was the latest developer to report a strong finish to last year after the stamp duty holiday helped to turbocharge demand. Like other builders, the company now hopes to resume paying a dividend this year.

After its announcement, shares closed up 2.5pc, or 4p, at 165p.

Pete Redfern, Taylor Wimpey’s boss, said: ‘While operations were impacted by the shutdown period, the return to near normal construction capacity and continuing resilience of the UK housing market enabled sales and production to recover strongly towards the end of the year.’

Also cheering an ‘extraordinary rebound’ in the property market since May was Savills, with the estate agent reporting that sales activity outside London had reached levels not seen since before the financial crisis.

The group said it expects profits for 2020 to be at the top end of expectations after a ‘resilient’ performance, with analysts predicting it will report an underlying profit of around £85m – down about 40pc since 2019.

But in contrast Savills said it was too early to make predictions for the year ahead, given uncertainty around the pandemic.

Experts are divided on what will happen to house prices in 2021, with mortgage lenders such as Halifax expecting prices to slam into reverse this spring when the stamp duty holiday ends.

A Savills spokesman said: ‘ We expect transactional activity to remain suppressed in the first half of 2021 followed by progressive recovery through the second half of the year.’

Shares rose 3.2pc, or 31p, to 1015p after the update.

Another cheery update came from home furnishings retailer Dunelm, which has benefited from the DIY boom during the pandemic – but this time investors were not as welcoming.

Despite reporting an 11.8pc rise in sales for the 13 weeks to December 26, the firm’s shares fell 8.3pc, or 107p, to 1189p.

Dunelm said it experienced ‘buoyant’ customer demand over the final three months of 2020, even as lockdown measures forced its stores to close.

That was partly thanks to the popularity of its click-and-collect services, which means that customers could order online but still collect goods from the retailer’s mostly-shut branches.

Off the back of the sales bonanza, Dunelm now expects half-year profits of £112m, up from £83.6m in 2019.

It was not so rosy, however, at fellow retailer Card Factory, which fell 7pc, or 2.8p, to 37.3p after warning it was set to breach the terms of its borrowings by the end of this month.

The FTSE 100 rose 0.84pc, or 56.44 points, to 6801.96, while the FTSE 250 finished up 0.77pc, or 159.44 points, at 20775.75.