Sustained demand fuels resilient results at house builder

Persimmon has reported healthy demand with a robust forward sales position as it publishes its half year results for the six months ended 30 June 2022.

The York-based house builder achieved 6,652 new home completions in this period (H1 2021: 7,406) along with total group revenues of £1.69bn (H1 2021: £1.84bn) and pre-tax profits of £439.7m (H1 2021: £480.1m).

8,829 plots were brought into the business across 37 locations – a replacement rate of over 130%.

Dean Finch, group chief executive, said: “We are making important progress in quality, service, land investment opportunities and efficiencies to build an even stronger business, while continuing to deliver good financial returns.

“Demand for our homes has remained robust, with our average private sales rates for the period being c.1% ahead year on year.

“We have some exciting new sites coming into the business at industry-leading margins, with a land replacement rate for the period of over 130%.

“Expanded production in our own brick, tile and timber frame factories, is further enhancing our supply resilience and cost efficiency, enabling us to re-iterate our guidance of 14,500 – 15,000 legal completions for the full year.”

Persimmon says its build rates improved by about 10% compared with pre-Covid levels, adding that it has a healthy forward order book worth £2.32bn.

Commenting on the start to the second half, the business notes its average private sales rate for the first seven weeks is 11% down year-on-year against a strong comparator as it returns to a more normal seasonal pattern. This figure is up 8% on 2019 being the most recent, more typical trading year.

Persimmon says it is well aware of the potential impact of further interest rate raises as well as of the broader economic problems set out by the Governor of the Bank of England, alongside wider industry challenges including the withdrawal of Help to Buy.

However, it adds that the the longer-term fundamentals of the UK housing market remain strong.