Persimmon forward sales top £1bn as mortgages ease

York-based house building giant Persimmon plc said its current forward sales position is up 2% on the prior year at £1.060 billion, of which £499 million relates to private forward sales, which are up 4%.

Persimmon published a trading statement on Wednesday ahead of its final results for the year ended December 31, 2023, which will be released on March 12.

The York firm said it completed the sale of 9,922 new homes in 2023, down 33% on 2022, but ahead of previous guidance “with a particularly strong delivery in Q4.”

The group’s private average selling price increased by 5% to £285,770 “which largely reflects the mix of developments and house types sold.”

Persimmon shares rose about 5% to around £14.60 to give the York firm a current stock market value of roughly £4.7 billion.

In its outlook Persimmon said: “The private average selling price in the forward order book is c.£266,100 predominantly reflecting the mix effect of sites and homes sold, along with some targeted investor sales.

“We anticipate market conditions will remain highly uncertain during 2024, particularly for first-time buyers and with an election likely this year.  

“However, mortgage rates are beginning to ease, and the response to our recent Boxing Day campaign has been positive, generating a substantial number of leads for our sales teams. Encouragingly, build costs continue to moderate which will benefit completions in 2024.

The longer-term demand outlook for new homes remains favourable. As a five-star builder, with private average selling prices below the market average, high quality land holdings, and a robust balance sheet, Persimmon is well-positioned for sustainable growth when conditions improve.”

Persimmon CEO Dean Finch said: “Persimmon performed well in challenging market conditions, delivering completions ahead of expectations in 2023 alongside enhanced quality metrics of our already five-star homes.

“Persimmon’s offering is resonating well with customers with sales rates relatively robust throughout the year.

“We have successfully balanced our need to control costs, whilst investing in the business to position it for sustainable growth when conditions improve.

 “I would like to thank our colleagues, sub-contractors and suppliers for their commitment and support.

“Their hard work has helped ensure that Persimmon remains well positioned to serve customers across the UK who seek high quality, sustainable homes at a price they can afford.”


Aarin Chiekrie, equity analyst at Hargreaves Lansdown: “Despite the difficult and uncertain trading backdrop, Persimmon’s valuation’s been on the charge in recent months. New home completions came in ahead of group expectations in 2023 but were still down by a third on the previous year.

“Alongside an increased use of incentives, these lower volumes mean there’s much less cash coming in the door. In a bid to keep the cash coffers in reasonable shape, investment in new land has been reigned right back – something we expect to continue in the near term, given the group’s healthy land bank.

“Market forecasts are suggesting a 35% fall in revenue for 2023. Coupled with the effect of lower volumes and build cost inflation remaining more stubborn than the group had anticipated, operating profit margins look set to roughly halve year-on-year to around 14%.

“While that’s not ideal, it’s a picture that’s largely being repeated across the sector. Investors need to keep in mind that housebuilders are cyclical businesses that go through periods of ups and downs.

“Persimmon’s in-house materials business is a key differentiator though, giving it quicker and cheaper access to key materials and offering some relief to inflating costs.

“Still, the near-term outlook remains challenging, and it could be a while before we see a step change improvement in buyer confidence across the housing market.”

Victoria Scholar, Head of Investment, interactive investor: “After a painful period for the sector following 14 straight rate hikes from the Bank of England coupled with elevated cost inflation pressures, Persimmon has started to enjoy a reprieve with mortgage rates finally easing and build cost inflation moderating.

“With the central bank anticipated to cut interest rates later this year, mortgage rates are likely to ease further this year, driving buyers back to the housing market as affordability pressures come down.

“House prices nonetheless are likely to remain under pressure amid the tighter monetary policy backdrop and the risk of a recession this year, and Persimmon warned that market conditions remain uncertain.

“But there are green shoots of hope emerging in the sector that investors have been clinging to in recent months, sending shares in Persimmon higher by around 45% over the last half year.”