FILE PHOTO: Construction workers work on a Taylor Wimpey housing estate in Aylesbury, Britain, February 7, 2017. REUTERS/Eddie Keogh

(Reuters) - Britain's third-largest homebuilder Taylor Wimpey Plc TW.L said it still sees strong demand for its homes in the second half, even as the market grapples with Brexit worries and rising costs.

Taylor Wimpey is among the homebuilders that has warned of rising costs as it stocks up on building materials, but the builder on Wednesday said that it expects cost inflation to reduce in 2020.

The FTSE-100 builder reported a 12.5% rise in its order book as at Nov. 10 to 2.7 billion pounds, benefiting from strong underlying demand for its homes, low interest rates, a competitive mortgage market and the government’s Help to Buy scheme.

“Forward indicators for sales have remained at healthy levels albeit we have seen some increasing customer caution, particularly in the higher-priced markets of London and the South East, as a result of the ongoing political and economic uncertainty,” the company said.

The company, which has regional businesses across the UK and Spain, said it expected slightly higher annual volumes but a tad lower operating margins than last year.

Total order book, excluding joint ventures, stood at 10,433 homes as at Nov. 10 from 9,843 homes a year earlier.

Taylor, which competes with Barratt Developments BDEV.L and PersimmonPSN.L also said it expects its Spanish business to deliver a strong operating profit in 2019.