Home Commercial Property Recent political and economic uncertainties are impacting sales at Persimmon

Recent political and economic uncertainties are impacting sales at Persimmon

by LLP Finance Reporter
11th Nov 22 1:23 pm

Recent political and economic uncertainties are impacting sales at Persimmon and have seen cancellation rates increase to 28% between July and November from 21% during the previous 12 weeks period.

Yet despite this, the volume housebuilder says that it is on track to deliver its full-year volume expectations. Issuing a trading update covering the period from July 1 to November 7, Persimmonโ€™s average net private weekly sales rate per outlet fell to 0.48. For the entire period, this was 0.60 compared to 0.78 for the equivalent period in 2021, also reflecting challenges, including cost-of-living pressures.

Since September, the company said its private reservation average selling price had fallen 2% against the previous 12 weeks, all โ€œreflecting the uniquely disruptive political conditions and deteriorating economic outlookโ€.

While Persimmon said it had seen mortgage providers and customers adjusting to higher interest rates, โ€œthe full impact of this uncertainty on consumer behaviour is yet to be determinedโ€.

But it added that it currently expects to achieve fewer legal completions in 2023 than this year, and โ€œthis together with a deterioration in average selling prices will have an impact on 2023 marginsโ€.

It is fully reserved for the current year. Its legal completions to November 6 totalled 9,974, falling against 2021โ€™s 10,728. Last yearโ€™s higher figure, it said, reflected โ€œpent-up post-Covid demandโ€. It operated from an average of 305 active sites in the period, of which an average of 268 were sales outlets.

Persimmonโ€™s building safety provision is expected to increase to ยฃ350 million. This conveys government stipulations and the housebuilder discovering further affected buildings through DLUHCโ€™s expanded scope. The number of eligible multi-storey developments Persimmon is responsible for currently stands at 71.

It said it remained โ€œwell-positionedโ€ to achieve its target of between 14,500 to 15,000 homes for 2022, โ€œdespite some increased risk from recent elevated cancellation ratesโ€.

Dean Finch, Persimmonโ€™s group CEO, said, โ€œPersimmon enters this more challenging period as a five-star builder, with average selling prices below the market average, high-quality land holdings, and a robust balance sheet.โ€

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