Persimmon increases new construction target to 10,500 homes this year
- Persimmon said it built 4,445 new homes in the first six months of 2024
- These properties sold for an average of £263,288, up 3% on the previous year
Persimmon expects to complete construction of approximately 10,500 homes in 2024, following a strong performance in the first half of the year.
The York-based housebuilding giant said the number of completed homes in the first six months of 2024 rose by 5 percent to 4,445 new homes.
These properties sold for an average of £263,288, up 3 per cent on the previous year. Persimmon says this is due to more new homes being sold to private homeowners.
Forecast: Persimmon expects to complete construction of approximately 10,500 homes in 2024
Persimmon’s pre-tax profit still fell by £4.7m to £146.3m as margins were squeezed by incentives and construction cost inflation, which offset rising house prices.
However, the company said it is confident it will deliver enough homes this year to meet the upper limit of its previous forecast.
Weekly net private sales figures rose 68 percent year-on-year to 0.69 per point of sale in the five weeks since July 1.
The UK housing sector is increasingly optimistic about a recovery in 2024 thanks to falling mortgage rates.
Mortgage costs rose in the past two years after the Bank of England raised the UK base rate 14 times in a row, before falling again as the BoE’s rate-cutting cycle ended.
When the BoE cut the UK base rate by 0.25 percentage points to 5 per cent last week, many lenders, including NatWest, Virgin Money and Halifax, responded by cutting their mortgage rates.
Persimmon also said it was “encouraged” by rising consumer confidence and recent UK government announcements on planning.
Dean Finch, CEO of Persimmon, said: ‘The first half of the year was strong, with improved sales figures and robust average selling prices, despite continued affordability challenges.’
‘Strengthening consumer confidence, improving macroeconomic conditions and the government’s ambitious planning reforms… all support our ambition to grow this year and into the future.’
The new government wants to build 1.5 million new homes in five years. It is doing this by, among other things, revising planning legislation and developing land in the ‘grey belt’, an area of lower quality.
In the 12 months to March 2023, just 212,570 new homes were built across England, well short of the previous government’s target of building 300,000 homes a year.
Persimmon Stocks rose 2.7 percent to £15.80 on Thursday morning, meaning they have risen by around 40 percent over the past 12 months.
Russ Mould, investment director at AJ Bell, said: ‘The housing sector is heavily dependent on the availability of affordable mortgages and from that perspective lending rates are moving in the right direction.
‘Continued construction cost inflation and a relatively weak real estate market kept margins tight in the first six months of the year. Investors increasingly want to see these green shoots translate into improved profitability.’
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