Home Property Persimmon plots it way to future growth

Persimmon plots it way to future growth

by LLP Editor
18th Aug 21 10:29 am

Some economists may be tempted to argue that the housing market is broken having gone through the cycle outlined by former US President Ronald Reagan, who once slammed typical cycle of Government economic policy as a case of ‘If it moves, tax it. If it keeps moving, regulate it. And if it keeps moving, subsidise it, says AJ Bell Investment Director Russ Mould.
“Yet the management team of Persimmon seem more optimistic than that as the York-based firm continues to add to its land bank, increase completions and plan generous cash returns to shareholders, even as the stamp duty holiday nears its close on 1 October and one form of subsidy goes away to be replaced by the original tax.

“Persimmon spent £200 million on its land bank in the first six months of 2021, as it added 10,272 plots and took the total to 85,771. Buying land at the right price at the right time of the cycle is a key skill for any builder as it lays the foundations for future growth and future profit margins.

“The land grab suggests that Persimmon feels the market is going to remain buoyant for some time to come, which makes sense given the ongoing imbalance between supply and demand, a possible post-COVID shift in demand to bigger, suburban dwellings and ongoing Government support (or subsidies) in the form of the latest version of the Help-to-Buy scheme. That is due to run until 2023.

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