Taylor Wimpey’s share price is in a poor shape this year because of several reasons:
- A persistent rise in borrowing cost – eg, mortgage costs rising at an accelerating rate
- A spike in Inflation – which erodes the purchasing power of buyers
- Economic uncertainty – arising from the war in Ukraine
- Surging energy cost – creating a ‘cost-of-living’ crisis
Against this backdrop, it is not surprising to see house prices fall back. In today’s trading update, even the firm has admitted that sales and conversion rates are up, while the cancellation rate is down (“cancellation rate for the second half of the year to date was 24% (2021: 14%), with a year to date cancellation rate of 18% (2021:14%)).“
The Taylor Wimpey share price (LON:TW) has had a rough ride over the past five years, it is down nearly 50% despite property being one of the cornerstones of the UK economy. The asset is so deeply entrenched in the social psyche of the nation that buying a house is often referred to as ‘climbing the housing ladder’. Against the backdrop of a secular rise in house prices, you can see why.
The average UK house price now stands above £290,000. This is near the record high. While prices have retraced somewhat in October, the current house price level is still far above the lows recorded just two years ago. No wonder many had put their hard-earned money in bricks-and-mortar.