Persimmon reports improving sales as it raises building targets

Companies like Persimmon have suffered a tough few years after a spike in inflation caused the Bank of England to raise interest rates.

This action made it more expensive for people to take out a mortgage, and in turn hammered the number of new homes companies built and sold.

Interest rates began to fall last summer from their peak of 5.25%, and currently sit at about 4.5%, with further cuts expected this year.

Completing 11,500 homes would be a significant improvement on the 10,664 Persimmon sold in 2024, and marks a upward trend from the year before when it did not even hit 10,000.

It would still be far below the levels seen before interest rates rose, after the company sold more than 14,500 homes in 2021.

Nonetheless, chief executive Dan Finch said the “underlying market fundamentals remain strong”.

The fall in rates combined with improving wage growth and lagging house prices has made house buying marginally more affordable of late, especially for the cheaper end of the market where Persimmon operates.

The company has seen sales rates rise by about one-sixth across all of its sites in the first nine weeks of 2025, compared to the same period last year.

And the company’s order book for private sales now stands about one-quarter higher than it did a year ago.

Mr Finch also pointed to Labour’s attempts to get the UK building more homes, which have included changing planning rules to make it easier to get housing projects approved.

Prime Minister Sir Keir Starmer has said he wants 1.5 million new homes built in the UK by the next election.

Mr Finch said: “The Government’s welcome planning reforms and pro-housebuilding agenda demands more of the high-quality, affordable homes which are Persimmon’s core strength, providing a positive tailwind.”

Richard Hunter, Head of Markets at interactive investor, commented: “There is much to like within this release and given Persimmon’s position as a preferred sector play, it is well positioned to reap the benefits of an improving backdrop.

“The numbers themselves contain few surprises following a recent and detailed trading update, but they nonetheless show key metrics which are moving in the right direction across the board. Revenues increased by 16 per cent to £3.2 billion against estimates of £3 billion, while underlying pre-tax profit of £395.1 million was 10 per cent higher than the previous year and comfortably ahead of the £384 million consensus.”