House Sales Seen to Rebound After Election

July 2, 2010 - PRLog -- Veteran housebuilder Taylor Wimpey plc sees a promising rebound in the local property markets but remains cautiously guarded about its future for the moment. The company confirms industry observation that house sales had been weak around the general election period but slightly took off in recent weeks.

Slow Sales and Uncertainties

First half 2010 property sales remain virtually flat when compared against the same time last year.  Estates agents are keen to focus on improving prices rather chase down the volumes.   Property analyst Hometrack has reported that new property buyers only get to pay an average of 94.3% of the asking price while a new house on sales averages 8.4 weeks to sell off.

TW hopes to complete the sales of 4,650 houses for the first half of the year, slightly down from 4,702 for the same period last years.  The selling price averages £167,000m up from £153,000 during the same period last year.  Compared to the other side of the Atlantic , US property sales where likewise flat from last year’s.  But the overall feeling of economic uncertainty, compounded by the possible impact of the sovereign debt crisis in the continent, remains to cloud the British property markets.

TW is in the opinion that there’s a shortfall in the supply side of the property markets, though other analysts already indicated a lopsided balance with more supply outstripping demand, hence the slow inventory movement and flat prices.

Cautious about the Future

But regardless, with the current economic and political uncertainty, TW remains on the cautious sides of its business.  The recent UK budget contains no unwanted measures that could have any adverse impact on the local property markets, but the company remains concerned regarding government future expense reviews that may retard housing project initiatives especially social housing grants.

Shares of stock in Taylor Wimpey plc rose 0.27p to 30.73p to bring the company’s market value to £1 billion as the close of trading last Friday. But the reaction from market analysts was a mix. Peel Hunt of KBS has issued a sell note, indicating that “the trading update is fine, with nothing to ignite share prices even as the post-budget excitement has dissipated. We do expect rough sailing looking forward in the US markets and if this puts dampers on local economic activities, then recovery in the UK remains bleak.”

Panmure Gordon said there was nothing unexpected in the updates stating that “In our opinion, the property sector can be relieved and take some comfort in today's statement. We firmly maintain our hold recommendation and the 40p share price target, believing it to have better stock value elsewhere at the moment - most notably Barratt, Persimmon and Bellway.”

Meanwhile, Investec retained its buy rating saying, “We are sticking with our 2010 estimates based on the updates we are getting.” No surprises there, starting off upbeat, but worsens in tone. The statement airs some concerns about the spending review this autumn with prospects of removing housing grants.

The US market generally maintains its volatility, and we expect some weighting in the UK as we enter the second half of the years.  “We remain as buyers, even as shares could deteriorate in value in the short term.” GP


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