Falling second half demand for housebuilder as economic gloom deepens
Housebuilder Persimmon reports that it completed the sale of 14,868 new homes in the year ended 31 December 2022, which is towards the top end of previous guidance.
The average selling price was £248,600, up 5% from £237,078 in 2021.
But the York-headquartered business says it experienced “notably weaker” customer demand in the second half of the year, as concerns over the economy, mortgage rates and the cost of living weighed heavily on consumer confidence.
The company’s trading performance weakened across all geographies with the biggest impact on sales seen in its Southern regions.
Persimmon says it saw a particularly sharp fall in demand on those sites where Help to Buy was more widely used once the scheme in England closed for new applications from 31 October.
Dean Finch, group chief executive, said: “Persimmon has delivered a strong performance for 2022 which has been achieved despite headwinds from supply constraints in the early part of the year and a more challenging sales environment in the second half.
“In the second half of the year, rising interest and mortgage rates, inflation and weaker consumer confidence began to impact customer behaviour across the housing market.
“This change in market conditions gathered pace in the fourth quarter and is reflected in the reduction in our recent weekly sales rates and a lower forward sales position as we enter the new financial year.
“However, with high quality land holdings, a strong balance sheet and an experienced management team, Persimmon is well placed to navigate this challenging short-term backdrop, while continuing to take advantage of any opportunities that may arise.”
The company adds it is promoting initiatives to stimulate customer interest, including the recent launch of a “10 months mortgage free” customer offer. However, Persimmon stresses it is too early to predict when there will be a recovery in demand.
It notes the longer-term demand outlook for new homes remains favourable, and that it has entered this period of uncertainty with a strong balance sheet.
