Persimmon sees a strong start to 2021 amid healthy demand for new homes

The York-based group told shareholders at its AGM that demand for newly built homes remains healthy.

Dean Finch, group chief executive, told investors: “Persimmon has made a strong start to the year with current forward sales 23 per cent ahead of last year and 11 per cent ahead of the same point in 2019.

“Our build rates continue at pre-Covid levels and we remain on track to deliver first half volumes approaching those of the first half of 2019.

“We are progressing our land holdings and taking advantage of good quality investment opportunities, bringing 6,000 plots across 29 locations into the business in the period and securing a strong pipeline for the future. Our current outlet network is expected to remain stable at approximately 300 outlets on average throughout the year.”

Last month, Mr Finch outlined five key priorities to ensure Persimmon achieves its new ambition and secures a reputation for providing both “outstanding service and outstanding value”.

He told shareholders: “We are making good progress and pleasingly our HBF customer satisfaction score remains ahead of the five-star threshold. Demand for newly built homes remains healthy and the group’s sales rates are encouraging.

“Persimmon’s high quality land holdings, balance sheet strength and liquidity provide a strong platform to continue to deliver the homes the country needs, underpinning long term sustainable returns for the benefit of all of its stakeholders.”

The group’s average selling price for homes sold to private owner occupiers is £252,000, up from £244,500 last year.

Persimmon said customer enquiry levels remained encouraging throughout the first four months of 2021 and its average private sales rate for the current year to date is well ahead of 2020, as expected given the impact of the pandemic last year. However, it is also 17 per cent ahead of 2019, before the pandemic struck.

Steve Clayton, HL Select fund manager, said Persimmon’s current run-rate of sales suggests the full year outlook could be significantly better than previous expectations.

“That explains the bounce in the shares in early trading. The market was expecting the group to match 2019’s outcome this year, but rather than simply recovering, the group looks to have moved straight onto outright growth, if it can maintain momentum in the business,” he said.

Mr Clayton warned that there will be challenges ahead.

“Stamp Duty is coming back, and can Persimmon actually maintain production at the levels currently demanded?” he asked.

He said that Persimmon’s earlier caution means it faces pressure to lift the rate of new site openings.

“Adding 6,000 new land plots in the quarter is a good start here, but buying land is not the same as building on it,” he added.

“The group is taking a cautious approach, suggesting that build rates will only match the 2019 level for the rest of the year, so analysts will be wary of pushing forecasts too far forwards at this stage. But with over £900m of cash in the bank, Persimmon faces its challenges from a position of huge strength.”