Housebuilder gloomy on UK outlook

Taylor Wimpey says the UK market remains "extremely challenging"

UK housebuilder Taylor Wimpey has said it believes there will be no short-term recovery in the UK housing market.

However, it welcomed last week's "significant" rate cut and said it hoped this would enable the market to return to "stability" more quickly.

The comments came as the firm said it had cut 1,900 jobs so far this year, 1,000 more than previously revealed

Taylor Wimpey also said its house sales since the start of July had been down 27% on the same period last year.

The housebuilder reiterated that it planned to complete talks with banks over new borrowing arrangements early next year.

However, it added that it would consider other options to reduce its net debt of about £1.9bn. There were reports last week that the company was in talks with a private equity firm over a cash injection.

'Bleak' situation

In August, Taylor Wimpey reported a £1.54bn loss for the first half of the year after it made a sharp write-down in the value of its assets.

Today's update from Taylor Wimpey confirms the dire state of the UK and North American housing markets Keith Bowman, Hargreaves Lansdown Stockbrokers Taylor Wimpey share price

In its latest trading update, Taylor Wimpey warned that it might have to make further write-downs if market conditions failed to improve.

It said conditions in the UK housing market had remained "extremely challenging", with the recent events in the world's financial markets hitting consumer confidence.

Sales since the start of July net sales have averaged 165 a week, compared with 220 a week in the first half of 2008 and 225 in the second half of 2007.

Cancellation rates in the second half of 2008 have been higher than average.

The firm said its current order book stood at 6,607 homes, down 40% on a year ago.

It added that conditions had continued to be "difficult" in its North America business and it expected trading to remain weak into next year.

"If further evidence were needed, today's update from Taylor Wimpey confirms the dire state of the UK and North American housing markets," said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.

"All in the all, the situation remains bleak. Group debt of £1.9bn is casting a very long shadow, the renegotiation of group banking arrangements continues to drag on, whilst management is now considering a further downgrade of its land bank and work in progress valuation."