Blackfriar: Britain's homebuilders are doing a sterling job post-Brexit

As Persimmon says, people still need to live somewhere even if the economy goes pear shaped.

The York-based housebuilder reported a ​strong third quarter, brushing aside Brexit fears ​as private sales ​leapt 19​ per cent.

That said the news from Nationwide that ​house price growth ground to a halt in October after 15 successive month-on-month increase​s is worrying.

Also​ Persimmon​, ever the Brexit optimist, ​​​has said it will slow the pace of new land purchases due to the uncertainty likely next year as Britain starts divorce talks with the EU​.

Chief executive Jeff Fairburn said: “We recognise that the uncertainty surrounding the potential impact of the EU Referendum result on the UK economy may continue for some time.”

Whilst growth in Britain’s construction industry hit a seven-month high in October as housebuilding rose, slowing order books and soaring prices for building materials darkened the outlook, the Markit/CIPS UK Construction Purchasing Managers’ Index showed on Wednesday.​ ​

The ​Markit/CIPS​ d​ata showed ​that ​business expectations for the year ahead cooled markedly, while prices paid by construction firms for raw materials and goods rose at the second-fastest pace since 2011.

​​Paul Trigg, construction specialist at trade credit provider Euler Hermes​, said: ​​“We expect input prices to rise significantly in 2017 which will put financial pressure on an industry just about managing on squeezed margins and fixed-price contracts​.”

The fall in sterling is expected to push the Bank of England to raise its inflation forecasts on Thursday to show a bigger overshoot of its price target than at any time since it gained independence in 1997.

I​t’s hard to know what to think at the moment​. Each month we see conflicting data and there is a real fear that no-one, especially the Government, has a clue what shape the economy will be in once Prime Minister Theresa May triggers Article 50 early next year.

Nicholas Hyett, ​e​quity ​a​nalyst at Hargreaves Lansdown​, summed this up well​:​ ​“Recent data on the housing market has been confused to say the least, with banks continuing to report slowing rates of mortgage approvals and stalling house prices, while housebuilders say sales and interest both remain strong​,” he said.​

​He said that Help to Buy might provide some explanation because the ​G​overnment’s scheme only applies to new build houses. That could be supporting demand in the new-build sector in which housebuilders operate – providing the industry with a cushion the rest of the housing market lacks.

​“​Nonetheless, Persimmon looks to have been preparing for tougher times ahead,” he added.

“The group expects increased cash balances at the year end, and is reducing investments in new land. More cash in the bank and a more cautious approach to investment suggest the group is laying foundations to weather a coming storm.”

Whatever emerges, Northern housebuilders like Persimmon and Avant Homes are well prepared​. They have ignored the glamour and high stakes of the South East property market to focus on their Northern heartlands, areas where housing is still affordable and home buyers have their heads screwed on.

​Persimmon’s chief executive Jeff Fairburn said: ​“​If customers can afford the deposit they won’t be put off at the thought of Brexit. They want to get on with their lives.

“The housebuyer is not about to put their life on hold. The uncertainty is what will happen with jobs.”

There appears to be a general belief that we will continue to enjoy the party in the run up to Christmas, but we may face one almighty hangover come the New Year as shop prices rise, investment falls, jobs are hit and inflation rises at a time of little economic growth.