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, Persimmon’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 “reflecting the uniquely disruptive political conditions and deteriorating economic outlook”.
While Persimmon said it had seen mortgage providers and customers adjusting to higher interest rates, “the full impact of this uncertainty on consumer behaviour is yet to be determined”.
But it added that it currently expects to achieve fewer legal completions in 2023 than this year, and “this together with a deterioration in average selling prices will have an impact on 2023 margins”.
It is fully reserved for the current year. Its legal completions to November 6 totalled 9,974, falling against 2021’s 10,728. Last year’s higher figure, it said, reflected “pent-up post-Covid demand”. It operated from an average of 305 active sites in the period, of which an average of 268 were sales outlets.
Persimmon’s building safety provision is expected to increase to £350 million. This conveys government stipulations and the housebuilder discovering further affected buildings through DLUHC’s expanded scope. The number of eligible multi-storey developments Persimmon is responsible for currently stands at 71.
It said it remained “well-positioned” to achieve its target of between 14,500 to 15,000 homes for 2022, “despite some increased risk from recent elevated cancellation rates”.
Dean Finch, Persimmon’s group CEO, said, “Persimmon 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.”