Housebuilder Persimmon warns of an 'uncertain' housing market in 2023

The company said that the rate at which it was selling homes had slowed dramatically in the last three months of 2022, but had recovered somewhat since the new year began.

Chief executive Dean Finch said: “The market remains uncertain. Our marketing campaign has helped improve the group’s sales rates in the new year from the lows at the end of 2022, but they still remain lower year on year.

“We have carefully managed our pricing, recognising the improved value and energy efficiency of our product in these difficult times and sales prices have proved resilient.

He added: “The sales rates seen over the last five months mean completions will be down markedly this year and as a consequence, so will margin and profits.”

Richard Hunter, Head of Markets at interactive investor, commented: “Persimmon has ground out a creditable performance considering the challenges of the last year, although the current outlook is rather more troubling. All things considered, the housebuilding sector is one which is currently fraught with difficulties and the share price performance reflects the changing of the tide.”

Charlie Huggins, Head of Equities at Wealth Club, commented: “Persimmon, like its peers, has seen a slight pickup in sales since the start of the year. But overall, the outlook for the year ahead remains downbeat.

"New home buyers are clearly exercising greater caution, and frankly who can blame them. Mortgage payments for first time buyers have significantly increased over the past year. When combined with the limited availability of high loan to value mortgages and the end of the Help to Buy scheme in England, it’s no surprise that the housing market has seen a marked slowdown.”

He added: “Persimmon has earned juicy profit margins on the back of housing market strength over recent years. But this year it is facing significant margin pressures.

"Cost inflation still remains a problem, while the group warns that the number of home completions could fall to around 8,500 this year, down from c. 15,000 in 2022.

"Add this to extra sales and marketing costs needed to shift homes in a weaker environment and the group's margins could easily halve this year, depending on how the rest of the year plays out. Persimmon has responded by battening down the hatches, significantly reducing land approvals and placing restrictions on hiring and new site openings. They are operating in ‘wait and see’ mode, until the outlook for the housing market becomes clearer.”