Very few companies founded by a 16 year old can claim to have the level of success that Taylor Wimpey has had. Since its inception in the 1920s, Frank Taylor’s company has gone on to become of the largest house building companies in the United Kingdom. Fitting for its size Taylor Wimpey shares are key feature of the London Stock Exchange and FTSE 250 Index. After merging with rivals George Wimpey, another historically relevant house building company, the company has gone from strength to strength.
It can be argued that no house building company had a better summer in 2014 than Taylor Wimpey. While others were struggling to gain traction, Taylor Wimpey posted strong half-year profits and seemingly found a winning formula. New government rules were hindering the business of their rivals, but Taylor Wimpey found that it was actually helping them thrive.
Their success has been solidified in two ways. Firstly, prices for new builds and overall sales rates were at the higher end of expectations. It meant that profit margins increased and that the government backed ‘help to buy’ scheme was actually pushing Taylor Wimpey to new heights. Even though the Bank of England mortgage lending caps have many within the house building trade concerned, it clearly hasn’t damped the spirits of Taylor Wimpey. It is this success that saw countless financial institutions give Taylor Wimpey shares a strong “buy” rating. Liberium Capital, Numis Securities, and Deutche Bank have all spoke positively of Taylor Wimpey shares in 2014.
Challenges do lie ahead for both Taylor Wimpey and Taylor Wimpey shares. These will come in the form of a price bubble, something that many analysts believe is on the horizon. The Bank of England’s financial policy committee introduced new measures in June 2014 that could come into play should house prices rise by more than 20% price to 2017. These regulations are strict in every sense of the word and follow the initial regulations that came in during April 2014, which in all reality should have restricted the performance of Taylor Wimpey. Within its trading update Taylor Wimpey moved fast to alleviate any concerns that may have been surrounding Taylor Wimpey shares by saying that they are “focused on the long term and delivering sustainable returns for our shareholders and so welcome sensible measures to reduce long-term risk and protect stability”. Whether this continued ‘role with the punches’ attitude will be a success moving forward remains to be seen.
As an investor you have probably had your fair share of run ins with the house market. The field can be such a fickle beast, which means it can hard to determine the good from the bad as the lines are so clouded. Taylor Wimpey put on an excellent showing in 2014, going against government regulations to prosper. Even though there are more regulatory challenges ahead for the company, one can argue that Taylor Wimpey shares are built strong enough to weather the storm.
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Alexander Bowring is a London based writer and a Southampton Solent University Screenwriting graduate. He has worked alongside TV personality and Telegraph feature writer Alison Cork, whilst also having produced content for ITV, This Morning, Canvas8, Who’s Jack, Alison at Home, and Bonallack & Bishop Solicitors. Alexander also has a keen interest in investments.