Taylor Wimpey has reported a drop in revenue of 20.5% in 2023, pointing towards the slowdown in house sales as the main factor.

The FTSE 100 listed developer also saw its profits for the year hit £474m, a 42.8% reduction compared to 2022.

With interest rates rising, mortgages have become less affordable, leading to a constriction on the demand for houses.

Furthermore, the number of completions in 2023 dropped to 10,848 from 14,154 in 2022, although the developer reported that the average selling price on private completions increased by 5.1% year-on-year to £370,000.

The firm also said that aligned build rates to demand changes and delivered annualised cost savings of £19m, as announced in January 2023 to improve operating efficiency.

Chief executive at Taylor Wimpey, Jennie Daly, said: "We delivered a good full year performance in line with expectations despite a challenging market, benefiting from our sharp operational focus, the quality of our homes and locations and a continued proactive sales effort."

Equity analyst at Hargreaves Lansdown, Aarin Chiekrie, added: "Taylor Wimpey’s put in a relatively resilient showing given the difficult market conditions of 2023. Full-year operating profits came in at the top end of group guidance, but this still represents a roughly 50% fall from the prior year’s levels. A combination of real house price declines and lower mortgage rates have helped to ease some of the affordability pressures for buyers since the beginning of 2023, and these trends appear to have carried into the new year.”

For 2024, the developer said that current trading shows "encouraging signs of improvement" as mortgage rates begin to match affordability and confidence in consumers.

The private sales rate in the year to date stands at 0.67 outlets per week, an increase of 0.05 outlets.

However, the firm has said that it came into the year with a lower order book, now totalling £1.95bn, compared to £2.15bn in the same week in 2023.

Chiekrie continued: "According to Rightmove, the first six weeks of 2024 saw a 7% increase in buyer enquiries year-on-year. A low activity base could set the scene for a better performance in 2024, with Taylor Wimpey’s trading early in the new year also seeming to support this view. The company’s seeing an uplift in sales rates on the back of improving affordability and increasing consumer confidence."

Head of markets at interactive investor, Richard Hunter, concluded: "Taylor Wimpey has navigated the economic storm carefully so far, with the strength of its operations leaving it well placed to benefit from any incremental improvements in the immediate future.

"Unlike some of its competitors, this has been recognised in a share price which has risen by 14% over the last year, as compared to a dip of 2.5% for the wider FTSE 100. While the initial share price reaction is factoring in a lower level of revenue and profit in the absence of any sustained signs of recovery thus far, the market consensus of the shares as a buy reflects not only that Taylor Wimpey is one of the preferred plays in the sector, but also that there is some embedded confidence in longer term prospects."

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