Taylor Wimpey sees surge in demand as sales centres reopen

Markets reacted positively as shares rose 4% this morning, although there’s been no announcement over when dividends may restart

Article updated: 5 June 2020 11:00am Author: Ian Forrest

  • Good news for investors as company shows signs of returning to normal in terms of its operations, and is perhaps sooner than many expected
  • Order book now stands at £2.8bn, up from £2.5bn at the same point last year, and cancellation rates remain low
  • Shares rise 4% in early trading as investors and market welcome latest results
  • Recommendation: Despite uncertainty on the horizon such as the possibility of rising unemployment levels later in the year, we maintain our ‘Hold’ recommendation

Taylor Wimpey provided some much-needed cheer for the housebuilding sector and wider market today with news that it’s seen a high level of demand to view its houses in recent weeks. This has led to an increase in reservations and the net sales rate has increased as sales centres have reopened in England. Construction sites have also begun work again and are preparing to reopen in Scotland. There was also good news on cancellation rates, which remain low, and the order book now stands at £2.8bn, up from £2.5bn at the same point last year. The coronavirus does continue to have an impact as many staff are still working from home, but the company has seen a big increase in traffic to its website recently.

This news was met with a positive reaction in the market this morning as the shares rose 4% in early trading. The fact that the company is rapidly returning to normal in terms of its operations is good news, and perhaps sooner than many expected. More significantly the fact that demand from potential house buyers has returned at a good level is very welcome, although that could change if unemployment increases later in the year and the economy turns down. The fact that there was no mention of when dividends might restart today is not surprising given that it is still early days in the recovery process, but investors will be watching the interim results, due on 29 July, for any clues about that. We continue with our hold recommendation.

All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

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Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.

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