I had such high hopes when I added Taylor Wimpey (LSE: TW) shares to my SIPP back in 2023.

The housebuilder looked terrific value, with a price-to-earnings ratio of around six or seven and a dividend yield north of 8%. I thought it was too good to ignore, especially as it was a solid, well-run and profitable company.

For a while, things went well. The shares were bumpy but had their moments, and it was a great day whenever the dividend landed in my portfolio. Then it all went wrong. Not just with Taylor Wimpey, but the entire sector.

A perfect storm

Higher inflation drove up interest and mortgage rates, pricing young buyers out of the market. It also made building materials more expensive, while the increase in Employers’ National Insurance forced up labour costs. The end of the Help to Buy scheme in England in 2023 didn’t help.

Then came the cladding scandal. Taylor Wimpey has set aside £544m for building safety and fire remediation, of which £131m had been spent by the end of 2025, diverting cash that might otherwise support investment or shareholder returns.

Taylor Wimpey shares have fallen 26% over the past year and 50% over five years. At around 82p today, they’re trading at levels seen in March 2013. That’s more than 13 years go.

Better results, worse outlook

The first half of 2026 was better than feared as revenue rose 1.7% to £1.68bn. However, profit before tax and exceptional items fell 20% to £118.6m and the board warned that market conditions would remain challenging.

It also slashed the interim dividend from 4.67p per share to 1.2p, while reducing its annual distribution policy from 7.5% to 4% of net assets. The forecast yield’s just 2.89% this year and 3.77% in 2027.

The trailing price-to-earnings ratio is about 10.2, but the forward figure is 15.6, reflecting falling earnings expectations.

I find it hard to disagree with the company’s gloomy outlook. A November interest rate hike’s possible, with further potential increases next year. Much depends on the Iran war and whether inflation retreats in 2027 as some forecasters expect. I’m not so hopeful.

Is it time to buy more?

Investors might consider buying Taylor Wimpey if they believe interest rates will eventually fall, the UK economy recovers and housebuilding picks up. That is a plausible scenario, and Taylor Wimpey has a strong landbank and a business capable of benefiting when conditions improve.

But it would be a brave contrarian call. The shares aren’t obviously a bargain with profits and dividends shrinking. The sector’s struggled for years, and its troubles are far from over.

I will hang onto Taylor Wimpey out of sheer doggedness, but thoroughly understand why others might sell. This is now a recovery play rather than the juicy income stock I thought I was buying in 2023. And the recovery seems some way off.

I can see much better income stocks out there, including this property company that still yields 7%…

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Harvey Jones owns shares in Taylor Wimpey.