Persimmon retains annual build target on improved Q1 sales rate

An higher quarterly sales rate helped ease concerns that a sector slowdown could extend into the following year, according to British homebuilder Persimmon Plc, which stated on Wednesday that it intends to build homes at the top end of its annual guidance range.

The British housing industry has shown indications of recovery in 2023 after experiencing a significant downturn in the last quarter of last year, helped in part by an increase in fixed mortgage rates leading into the typically robust spring selling season.

“Trading over recent weeks has offered some signs of encouragement, with visitor numbers up, cancellation levels normalising, and sales rates continuing the steady improvement evident since the start of the year,” CEO Dean Finch said.

According to Persimmon, its year-to-date forward sales, a crucial indicator of near-term demand, were 30% lower than they were a year ago at 1.7 billion pounds ($2.11 billion).

The home builder noted that there were little indicators of a short-term slowdown and that build cost inflation remained stable at 8% to 9%.

Net private sales per outlet for the FTSE 100 firm increased to 0.62 units in the first quarter from 0.30 in the fourth quarter of 2022 and 0.98 in the preceding time frame.

Persimmon had warned last month that the weakening housing market in Britain would hurt yearly profitability and reduce dividends by 75% as it anticipated annual home completions in the 8,000–9,000 unit range.