Taylor Wimpey has seen its share price drop by almost 5%, after stating in its H1 update that its second quarter was "more challenging" as affordability pressures were exacerbated by the Middle East conflict.

The housebuilder reported that while its revenue increased by 1.7% to £1.68bn in the six months to 28 June, its operating profit fell by 19.4% to £129.7m.

The group also returned to a £116.8m profit in H1, compared to a loss of £92.1m in the previous year, although its profit before tax and exceptional items dropped by 19.9% to £118.6m.

Furthermore, its group completions, including group ventures, fell by over 5% to 4,986 homes and its total order book represented 6,882 homes with a value of £1.93bn, compared to 7,269 homes with a value of £2.11bn in the previous year.

Chief executive at Taylor Wimpey, Jennie Daly, said: "We delivered a solid first half performance in a challenging market, reflecting the hard work and commitment of our teams. We achieved a robust sales rate and continued to make positive planning progress supporting further outlet growth.

"Against a backdrop of continuing market uncertainty in which affordability remains stretched, we are focused on delivering our strategy and generating value from our strong balance sheet and high-quality, well located landbank. We are managing the business tightly, controlling costs and building resilience for an improved housing market when it comes."

Taylor Wimpey said that the market remains "uncertain" and while customer demand continues to be good, conversion is taking longer and buyers remain highly price conscious.

It added that it continues to support the government’s housing ambition, but without targeted demand support and measures to unlock delivery, weaker demand, rising costs and limited affordable housing funding will reduce sector output.

The group said it remains focused on "disciplined execution, improving capital efficiency and maintaining balance sheet strength", positioning it to navigate current market conditions and deliver long-term value.

Daly concluded: "Reflecting the prolonged nature of the downturn which has reduced expected profitability and cash generation, the board has reviewed the level of cash returns and deemed it prudent to revise our distribution policy to preserve balance sheet strength, retain financial flexibility and support our commitment to optimising shareholder returns through the cycle.

"Housebuilding drives growth, jobs and opportunity across the UK, and getting first-time buyers onto the housing ladder is essential for a functioning housing market. Rising build costs and the cost of regulation are making it harder to build in the places where homes are needed most. As one of the country's largest private and affordable homebuilders we are well positioned to deliver, and we look forward to working with government on practical measures to unlock demand and support housing delivery."

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