Housebuilder Persimmon cautious on cooling housing market

Housebuilder Persimmon has revealed revenues are back above pre-pandemic levels for the first time but cautioned that the housing market could cool as cost pressures start to impact the sector.

The company said it completed 7,406 house sales in the six months to June 30 – up from 4,900 in the same period a year ago at the height of the first national lockdowns – and almost at the 7,584 amount achieved two years ago.

Bosses also revealed all management companies, agents and building owners entitled to support as part of a £75 million fund to remove banned cladding have now been contacted, with work progressing.

Total revenues were £1.84 billion, up from £1.2 billion in the same period a year ago and beating the £1.75 billion revenues recorded in the first six months in 2019.

The average house selling price also increased by 4.9% on a year ago to £236,200 as the stamp duty holiday was extended.

But bosses flagged that the industry is feeling pressure from inflation hitting supply chains and the aftermath of Brexit still impacting the sector.

The company said: “As the pandemic continues, we remain mindful of the ongoing uncertainties regarding the UK economy, including employment levels, consumer confidence, and the supply chain impacts of both Brexit and the pandemic.

“Despite this, the longer-term fundamentals of the housing market remain strong and, with the group’s UK-wide network offering new homes at compelling value, we are confident of Persimmon’s future success.”

The impressive turnaround in revenues during the last six months also led to the company announcing plans to return 110p-per-share of surplus cash as a one-off additional interim dividend payment.

Previously, it had intended to split up the dividend into two payments, one made in August this year and one in December. It will now all be paid on August 13.

But shareholders remained concerned about the future cooling of the housing market, with shares down 4.6% by Thursday lunchtime.

Russell Mould, investment director at AJ Bell, said: “This statement suggests that should a buoyant housing market start to cool, Persimmon might see its profitability come under pressure thanks to rising costs amid shortages of materials and labour.”