Differing outlooks in property market on Brexit uncertainty

Two well-known operators in the UK property sector have delivered contrasting views of the outlook amid uncertainty after the Brexit vote as they posted half-year figures yesterday.

A construction site overseen by Persimmon Homes. Picture: Michael Gillen

Persimmon, one of the UK’s largest housebuilders, reported robust home sales in a six-monthly trading update, and said that it remains optimistic after the referendum result. It said that it expected continued “good opportunities” in Britain’s property market.

However, this contrasted with the picture at regeneration firm St. Modwen Properties, which reported a slump in profits and warned that it will take a “more cautious approach” to its development until clarity in the property sector improves.

Charles Church builder Persimmon, which has 44 developments north of the Border, said trading in the first half of 2015 has been “strong” with group revenues reaching £1.49 billion, a year-on-year jump of 12 per cent.

The group added that the average selling price showed a year-on-year increase of 6 per cent to about £205,500, and it flagged its “excellent” pipeline of about 100 further new outlets, with construction expected to start on these in the second half.

Regarding the vote to leave the EU, Persimmon said it was “too soon to judge” the impact on the UK homes market. But it added: “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.

“We believe our focus on building traditional family housing in attractive locations for all purchasers from first-time buyers to home movers will continue to attract customers in good numbers.

“We remain confident in the group’s prospects based upon our long-term strategy, the group’s excellent forward orders, strong land bank and robust financial position.”

However, Persimmon’s shares slumped 7 per cent to close at 1,332p after the update, with Michael Hewson, analyst at CMC Markets, saying the firm “doesn’t appear to have assuaged any concerns” around valuations amongst housebuilders.

St. Modwen Properties also saw its share price tumble, down 10 per cent to close at 232.5p, after posting first-half pre-tax profits of £30 million, down from £206m..