Spanish property prices rise as demand explodes for second homes in the sun | City & Business | Finance
The developer has seen strong demand for homes throughout 2021, boosted by affordable mortgage costs and the stamp duty holiday. In Spain, the easing of travel restrictions has seen a surge in prospective buyers looking to find a second home in the sun. Taylor Wimpey says it has seen an increased level of demand, particularly in the second half of 2021, with the firm now aiming to ramp up building as property prices in the country rise. In 2021 Taylor Wimpey completed 215 homes with an average selling price of £348,000 (€417,000), up from 190 in 2020 with an average price of £313,000 (€375,000).
At the end of 2021 its order book stood at 324 homes.
The company’s Spanish arm has recently said some months in the last half of 2021 saw reservation numbers not seen in the 64 years it has been building there.
Back in the UK demand has continued to remain high with Taylor Wimpey ramping up output.
UK home completions increased by 47 percent in 2021 with 18 percent of new homes being affordable.
During this time average selling prices rose three percent which the firms says has fully offset rising building costs.
This still remains below the increase in house prices in many parts of the country though, with the UK House Price Index finding a 10.2 percent increase in 2021 nationally.
Chief Executive of Taylor Wimpey, Pete Redfern, commented: “Looking ahead, we are well placed to deliver against our targets.
“The outlook is positive and Taylor Wimpey is particularly well positioned.
“We maintain a sharp focus on delivering sustainable growth, strong profitability, and increased cash returns for shareholders over the long term.”
The firm is now looking to return cash to shareholders, potentially by a share buyback which would see it buying its own shares and boosting the value of those still held by shareholders.
A recent challenge to UK housebuilders has come from a toughened Government stance on the cladding crisis, with Housing Secretary Michael Gove warning developers they will need to pay to fix issues.
Mr Gove has given an early March deadline for the industry to agree to a fully-funded plan of action to fix unsafe cladding on affected buildings.
In its trading statement, Taylor Wimpey reported it had already announced it would cover the costs of bringing all its apartment buildings built in the last 20 years in line with current guidance, both on cladding and external walls.
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The firm says it has identified all buildings above and below 18 metres that may require work, with work already underway on many.
AJ Bell Investment Director Russ Mould described Taylor Wimpey as striking a “reassuring tone” on the cladding issue but warned other issues may lie ahead if housing demand reduces in 2022.
He explained: “It appears to be proactively getting out ahead of the issue, noting it has identified all affected buildings and existing provisions should be enough to cover the cost of repairs.”
“The challenge for the company will come as house prices cool, particularly as this has masked rising build costs so far.
“Inflationary pressures could begin to bite more if sales price growth stalls.
“Though a slowdown in the market could create an opportunity for Taylor Wimpey to buy land at attractive prices, thereby setting itself up for more profitable sales in the future.”
