The last 12 months have been a bit rough for the Taylor Wimpey (LSE:TW.) share price. Like many homebuilder stocks, Taylor Wimpey enjoyed a bit of a rally following the general election in 2024. Yet since then, investor sentiment has seemingly soured, resulting in shares falling by nearly 20% since last March.
However, the long-awaited planning reform bill by the new government is starting to see the light of day. And it promises to deliver the “biggest building boom in a generation”.
Considering the plan intends to deliver an extra 1.5m homes by 2029, that’s a pretty nice tailwind for Taylor Wimpey if successful. After all, the company’s sitting on a pretty extensive landbank of 79,000 plots. And with less bureaucracy plaguing the construction industry, the time and money spent before shovels are put into the ground should be drastically shortened. In theory, that means higher completions at a lower cost.
So what does this all mean for Taylor Wimpey’s share price over the next 12 months?
Growth in 2025
Assuming the government’s planning reform strategy is a success, the outlook for Taylor Wimpey looks fairly positive. Revenue projections for 2025 and 2026 indicate up to 11.5% and 8.9% growth respectively. Meanwhile, earnings growth is expected to follow at 5.3% and 18.3% respectively, demonstrating the impact of anticipated wider profit margins over time.
Translating this into a projected share price, the 12 analysts keeping tabs on Taylor Wimpey currently have an average target of 142p. Compared to where the stock’s trading today, that’s just over a 25% expected jump. And if accurate, a £1,000 investment today could be worth around £1,250 by this time next year.
Taking a step back
Earning a 25% return in one year is pretty impressive. Don’t forget the stock market average in the UK is usually only around 8%. However, like all forecasts, this outlook’s dependent on building activity ramping up. And that may prove more challenging than expected.
There’s also no guarantee that the reformed planning bill will even be a success. After all, this isn’t the first time a government has tried to solve Britain’s housing problem. Meanwhile, the country’s notoriously short on skilled builders, meaning that even with easier planning permission, construction rates might still lag.
There’s also the risk of oversupply to consider. If every homebuilder starts constructing more houses all at once, the increase in supply would likely cause house prices to fall. That’s good news for consumers but not so much for Taylor Wimpey’s profit margins, even with the benefit of lower planning costs.
Time to buy?
The future of Taylor Wimpey’s share price may not be as clear cut as analyst forecasts would imply. However, the firm appears to be well-positioned to capitalise on the new government policy. As such, investors may want to consider taking a closer look at this enterprise.
This post was originally published on Motley Fool
