York house builder sells more homes but warns mortgage costs still a ‘barrier’

Persimmon is expecting to complete the sale of between 11,000 and 11,500 homes this year, and around 12,000 in 2026.

Forward sales, meaning homes ordered but not yet bought, were up 9 per cent on the prior year, the company revealed.

Chief executive Dean Finch said he was “pleased that we have continued to grow in the first half of the year despite challenging market conditions and with affordability still an important constraint”.

This was particularly affecting first-time buyers, who represented about a third of the group’s private sales this year.

Mortgage rates have reduced since the Bank of England has been lowering its base level over the past year, but they remain at “levels that still present a barrier to many potential customers”, the builder cautioned.

Furthermore, a raft of rising household costs, including council tax, stamp duty, and energy bills, have weakened affordability for many.

Persimmon said the prices of its homes were lower than its biggest rivals and it had improved its range of affordable homeownership options like shared equity.

It also highlighted “positive developments” in the market this year including pay rises helping improve affordability for some buyers, and the easing of some mortgage lending rules.

Mr Finch, added: “Our average sales price, sales, completions, planning approvals, active sites and forward order book are all up, many against industry trends, showing that our strategy including a focus on self-help has continued to deliver.”

Oli Creasey, head of property research at Quilter Cheviot, said: “Persimmon’s results should be reassuring for investors, as key metrics are generally moving in the right direction. The company’s revenues are up 12 per cent year-on-year, driven by 4 per cent volume growth, but also an 8 per cent increase in the average sale price. This increase is partly due to a change in mix, with the company’s relatively more expensive Charles Church brand selling more houses this year, but also reflects the relative health of the housing market in London and the South-East compared to the rest of the country, with Persimmon generally not participating in the more expensive regions.”

Richard Hunter, Head of Markets at interactive investor, commented: “While these numbers do not shoot the lights out, there is clear evidence that Persimmon continues to propel those levers within its control.

“The sector is highly cyclical and the current UK economic backdrop is unstable. General uncertainty, mortgage availability concerns, slowing construction activity and pressures arising from increases to the likes of National Insurance and stamp duty are meaningful headwinds. That being said, there are a number of tailwinds which could yet revitalise the sector. More broadly, there remains a noticeable supply shortage of homes domestically, government reforms to planning should oil the wheels of being able to break ground, and the recent interest rate cut is a step in the right direction if not the ultimate goal.”