U.S. News

Woodrow, Wimpey Warn of Slow U.K. Housing Market

By Reuters

Britain's housing market is set to weaken as higher interest rates hit buyer confidence, two homebuilders, Taylor Woodrow and George Wimpey, said on Wednesday

The companies, due to complete a 2.5 billion pounds ($5 billion) merger next week, also said U.S. housing markets remained challenging.

The cautious tone contrasts with a positive comment on Monday by Persimmon, Britain's largest housebuilder by market value, which said the market remained resilient and more interest rises would not be detrimental to the market.

"In the U.K., we currently anticipate less buoyant market conditions in the second half of the year, due to the impact of recent interest rate changes and the effect of these on customer confidence," Woodrow said in a statement.

"In North America short-term market conditions remain difficult to predict. The focus of the business remains on managing costs and maintaining a steady sales rate."

Wimpey echoed Woodrow's cautious statement, and said first-half sales volume in its U.S. business would fell by 20%, while the total forward order book at week 25 was down by 41%, with significant reductions in margins and selling prices.

Wimpey said it remained confident of achieving operating margins for its UK business in excess of 14% for 2007.

The takeover of Wimpey by Woodrow, which will be completed on July 3, is the biggest to date in Britain's fast-consolidating building sector.

The combined Taylor Wimpey aims for at least 70 million pounds a year in cost savings from buying in bulk and also making job cuts, and the deal is expected to boost earnings for both sets of shareholders in the first year after completion.