York-based housebuilder Persimmon has demonstrated robust performance in the face of significant economic headwinds, reporting a substantial increase in forward sales despite growing consumer uncertainty surrounding the upcoming government Budget.
Steady Growth Amid Market Softening
The FTSE250 construction firm revealed that forward sales have jumped by 15% since July 1st, reaching an impressive £2.79 billion. Private sales constitute the majority of this growth, accounting for three-quarters of all forward sales. Notably, just over four-fifths of the company's anticipated private house deliveries have already been exchanged or completed.
This progress comes despite what the company describes as "some softening in the market since the summer," with consumer confidence being affected by ongoing uncertainties including the upcoming government budget. The weakness has been particularly noticeable at the upper end of the market, where potential buyers appear cautious about rumours of a potential 'mansion tax' expected later in November.
Financial Performance and Strategic Moves
Persimmon's strategic positioning appears to be paying dividends. The company's land bank grew by three per cent to 83,800 plots as of September 30th, while its sales rate increased to 0.76 net private sales per outlet per week.
The average selling price in the forward order book also showed positive movement, rising to £295,150 in November from £291,514 in June. This represents a 1.5 per cent increase compared to the same period last year, indicating resilience in pricing despite broader market concerns.
Expert Analysis and Competitive Positioning
Oli Creasey, head of property research at Quilter Cheviot, noted that Persimmon has been "making steady progress... despite headwinds." He added that management "appears positive that the outlook for the business remains relatively strong, and performance compares well against peers such as Taylor Wimpey."
Creasey suggested that the difference in sales rates between Persimmon and its competitors may be partly attributable to differing geographic biases. However, he also highlighted strategic decisions made by Persimmon's leadership, including the vertical integration of material supply and the recently announced 'Rezide' shared equity product, as significant factors in the company's relative success.
The general uncertainty in the market has been compounded by a public drop in confidence, influenced by the likelihood of Chancellor Rachel Reeves resorting to manifesto-breaking policies in her budget. Despite these challenges, Persimmon's latest figures suggest the company is navigating the turbulent conditions more effectively than many industry observers might have anticipated.
