Persimmon goes from strength to strength

Jeff Fairburn of Persimmon
Jeff Fairburn of Persimmon
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​Housebuilder Persimmo​n, ​Yorkshire's biggest listed company, ​cheered shareholders with the news of ​​a big rise in half-year profits ​and strong demand from customers for its traditional style houses.

The York-based firm has seen no sign of any Brexit impact as high employment levels are supporting​ a market ​that is seeing strong demand for new homes, mitigating the impact of ​rising inflation.

C​hief executive Jeff Fairburn said:​​ "People want traditional houses with a front garden and a driveway. They want a two storey home. Our houses are well designed and they maximise the use of space. Forward sales are great and that gives us the ability to invest going forwards."

The group ​reported a 30​ per cent​ rise in pre-tax profit​s​ to £457.4​m in the six months to June 30, while revenue rose 12​ per cent​ to £1.66​bn.

The average selling price of its homes rose 4​ per cent​ to £213,262, completion volumes increased 8​ per cent​ to 7,794 homes and forward sales ​rose 1​5 per cent​ ​to​ £2​bn.

"The market remains confident​," said Mr Fairburn​.

​"​Customer interest in our developments remains strong, with encouraging levels of interest through both our websites and our sales outlets as we trade through the quieter summer weeks.

"Whilst we remain vigilant to changes in market conditions, we also recognise we are in a strong position to take advantage of opportunities that arise. We are looking forward to a good autumn sales season."

Persimmon ​said that healthy employment levels and a competitive but disciplined mortgage market helped it trade through an inflationary squeeze on consumer spending, triggered by sterling's collapse following the Brexit vote.

​​Households have also seen their spending power come under sustained pressure from lacklustre wage growth, leaving fewer consumers willing or able to take the plunge into home ownership.

But Persimmon is one of a number of housebuilders to post bullish figures since the referendum, despite a string of recent surveys showing the housing market has cooled.

"​I think there is a difference at the moment between new and second hand property. Less people are selling their houses," said Mr Fairburn.

"People looking to get on the housing ladder are choosing new build."

Persimmon's relatively low house prices and its focus on the regions have also boosted the firm's trading.

"Our focus on the lower end of the market is helping," said Mr Fairburn.

"Everyone believes in the underlying requirement for more houses to be built. There is clearly an underlying demand from first time buyers."

The group said that customer interest over the last seven weeks from 1 July has remained robust and ​the​ average weekly private sales rate per site was 2​ per cent​ ahead of the same period last year​.

Laith Khalaf, ​s​enior ​a​nalyst​ at​ Hargreaves Lansdown​, said:​ "The latest results from Persimmon have a bit of swagger about them, and well they might, with profits rising by almost a third despite a slowdown in economic growth.

​"​The UK housebuilding sector is still sitting pretty, with interest rates staying low, the Help to Buy​ ​scheme supporting demand, and a lack of supply helping to boost prices.

​"​However the recent scare over the early withdrawal of Help to Buy demonstrated that the sector is vulnerable to a correction if one of those tailwinds suddenly disappears.

​"​For the time being that looks unlikely though, and policymakers will think twice about withdrawing support from the property market, as falling house prices don’t tend to draw cheers from the crowd.​"​