House market 'encourages' builder

Taylor Wimpey's share price

House builder Taylor Wimpey has said it was "encouraged" by stability in the UK housing market - and that a "severe" downturn should now be avoided.

Prices were now broadly flat, it said, while buyers returning to the market pushed forward orders up by 73% since the end of 2008 to £971m.

And fewer people had been cancelling orders than seen in recent months.

Taylor Wimpey said it hoped to see a rise in selling prices after keeping a tight control on its unsold homes.

Despite continuing difficulties in accessing mortgages, there were "signs that the situation is beginning to improve", the firm said.

"Whilst wider economic conditions remain weak and rising unemployment could still have an effect on our markets, the severe downside scenarios for which we have been planning now appear less likely," it added.

In North America, the company said market conditions had improved though it remained "cautious" about buying up land for new developments, despite "some attractive opportunities".

Taylor Wimpey was formed by the merger of Taylor Woodrow and George Wimpey in 2007.

The firm made a pre-tax loss of £1.97bn for 2008 - caused mainly by a £1.9bn write-down in the value of the firm's land values and other assets.

On 4 June, a survey by the Halifax said that UK house prices rose by 2.6% in May compared with April but activity remained low in the market.

This came shortly after the Nationwide building society reported a 1.2% rise in prices in May compared with April - the second rise in three months.