Shares of York-based house building giant Persimmon plc rose about 6% after it published a trading update for the period from July 1, 2023 to November 6, 2023 showing “a strong pick up since the start of October.”
In its outlook, Persimmon said: “We are on track to deliver around 9,500 completions for 2023 with operating profit in line with expectations and at an operating margin similar to the first half.
“On the whole pricing remains broadly stable although we have seen a slight reduction in group private average selling price in the forward order book and an increase in the use of incentives, particularly in the south where affordability constraints are greater.
“Over the past 5 weeks private sales rates have improved to 0.59 (2022: 0.45) showing a strong pick up since the start of October.
“Of this 0.08 relates to investor sales, with a series of small selective deals on targeted sites where appropriate.
“We anticipate investor sales will represent c.5% of our full year delivery.
“We are fully sold for 2023 and our current forward sales position has increased to £1.6bn since the half year (30 June 2023: £1.4bn).
“Of this £0.9bn relates to private forward sales (30 June 2023: £0.7bn) with a private average selling price of c.£277,750, (30 June 2023: £282,316).
“We have taken a proactive approach with suppliers and subcontractors to secure price reductions on both materials and labour over the past few months.
“In line with prior commentary, build cost inflation has been more stubborn than expected at the start of the year and we anticipate the annualised impact of build cost inflation through the P&L for 2023 will be c.8-9%.
“However, build costs have moderated since the half year which will benefit completions in 2024.
“Into 2024, we anticipate market conditions will remain highly uncertain, but we are well positioned with our focus on delivering high quality sustainable homes for our customers at a price they can afford with our Persimmon Homes average selling price c.25% below the national average.
“Our recent planning success means we have a number of new sites progressing through the pipeline which should support the opening of c.30 gross new selling outlets during Spring 2024.
“The longer-term fundamentals for the market remain positive.
“We have a proven track record of delivering strong returns through the cycle and our good progress in improving our key quality and service capabilities will allow us to respond quickly when conditions improve.”