Persimmon buoyed by '˜very healthy demand' for new homes

Housebuilding giant Persimmon cheered 'healthy' demand from homebuyers as it reported a 10 per cent surge in sales over the final six months of 2016.

Persimmon legally completed the sale of 15,171 new homes last year, an increase of 4% on 2015. Picture: Kimberley Powell

In its last update before posting full-year results next month, the group said the autumn selling season had seen robust sales reservations, boosted by readily available mortgage deals.

It legally completed the sale of 15,171 homes in 2016 – up 4 per cent on the previous year - while group revenues lifted 8 per cent to £3.1 billion. However, this marks a slowdown on the growth rates seen in 2015, when legal completions rose 8 per cent and revenues were 13 per cent higher.

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But York-based Persimmon hailed a strong performance over the past six months in the face of uncertain conditions caused by the Brexit vote in June.

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Its legal completions rose 9.6 per cent to 7,933 between June and the end of December as it sold 695 more homes than in the first half of the year, while its private sales rate in the second half was 15 per cent higher year-on-year.

The builder said: “Sales reservations through the autumn season were strong with healthy customer demand for new homes.

“Buying a new-build home remains a compelling choice supported by competitive mortgage offers which continue to make a new home purchase very affordable.”

Persimmon said price growth held largely firm on 2015, rising by 4 per cent on average to about £206,700. It added that forward sales stood at around £1.2bn at the end of 2016, up 12 per cent on a year earlier.

Latest construction industry data has signalled a decent end to the year for the sector, with output rising at its fastest pace for nine months in December, supported by another strong showing from housebuilders. The closely watched Markit/Cips purchasing managers’ index revealed that housebuilding activity rose at the fastest pace since January last year.

Persimmon opened 255 new development sites in 2016 and also bought around 18,700 plots of new land in 83 locations.

It said: “We continue to see good opportunities to acquire additional land whilst remaining mindful of the risks associated with the uncertainty arising from the UK’s decision to leave the EU.”

Analysts at Liberum said the update confirms that 2016 “ended strongly for the housebuilders”, but they warned over more shaky conditions in the property market over 2017.

The broker said: “The slowing economy is likely to cause house prices to soften somewhat, by 2.5 per cent in our view, and we also believe there are risks in the forthcoming white paper.

“We are concerned that the start of the formal application to leave the EU may increase uncertainty during the key spring selling season. Around a third of industry reservations are made between February and April.”