Persimmon posts good sales and signals calm over Brexit fears

Housebuilder Persimmon moved to soothe fears over a Brexit hit as it posted robust home sales and assured there would still be 'good opportunities' in Britain's property market.

Vision...Jeff Fairburn the CEO for Persimmon, York....SH1001440e...9th June 2014 Picture by Simon Hulme
Vision...Jeff Fairburn the CEO for Persimmon, York....SH1001440e...9th June 2014 Picture by Simon Hulme

The Charles Church builder said that, while it was “too soon to judge” the impact of last month’s vote to leave the European Union, it believes the “market fundamentals remain strong”.

York-based Persimmon - the UK’s biggest housebuilder by volume - said it sold 6% more homes in the first six months of 2016, at 7,238, with the average price up 6% at around £205,500.

In an update before full half-year results next month, the group said it took “good levels of sales” throughout May and June, with private sales around 1% higher year on year despite the uncertainty ahead of the EU referendum and tough comparatives from a year earlier.

Its comments come after shares in UK-listed housebuilders took a hammering following the Brexit vote amid fears it would spark a downturn in the housing market, with 38% wiped off Persimmon’s stock market value in a savage two-day rout.

But shares across the sector have since rallied higher as markets have recovered.

But Persimmon’s assurances follow figures on Monday that fuelled fresh fears for housebuilders after revealing the construction sector experienced its worst month for seven years during the run-up to the EU referendum.

The closely watched Markit/CIPS construction purchasing managers’ index signalled a shock contraction in the sector, driven by a “steep decline” in housebuilding and the first fall in commercial construction work since May 2013.

Shares in Persimmon fell 6% on Monday after the figures.

In its latest update, Persimmon said: “We believe that market fundamentals remain strong, supported by long-term unfulfilled demand, and that the UK housing market will continue to provide good opportunities for those companies with the right strategic focus and the balance sheet strength to navigate future changes in trading conditions.”

It added its strategy to focus on traditional family housing would “continue to attract customers in good numbers”.

Persimmon also assured over its financial strength and insisted a 10-year strategy put in place in 2012 was designed to help the group withstand knocks to the housing market.

It said site visitor numbers in the six months to the end of June were 8% stronger than a year earlier and the group said despite the later release of 35 sites for sale, its total forward sales held firm at £1.36 billion.

Group revenues overall were 12% higher at £1.49 billion.

The firm recently took action to help improve the accuracy of “move in” dates for buyers by releasing houses for sale later in the construction process, which meant its active developments were lower at 345 sites at the end of June against 375 at the start of the year.

It has already started building on 35 sites, which have not yet been launched for sale.

The group was recently forced to defend its executive pay plan that could see its senior managers share a £600 million bonus pot following criticism from one of its major investors.

Royal London Asset Management said the payment was “too high” for an industry where growth is being supported by Government measures such as the Help to Buy scheme.

But Persimmon said the scheme was “designed to drive outperformance” by returning cash to shareholders, growing the firm and boosting its share price.