Persimmon posts solid trading but growth slows

Persimmon announced solid trading for the first half of its financial year but business for the housebuilder is slowing.

Revenue rose 5% to £1.84bn in the six months to the end of June and completed sales increased 3.6% to 8,072 homes. The average selling price rose 1.2% to £215,000.

A year ago revenue was up 12%, completions were up 8%, and the average selling price had risen 3.5%.

Persimmon said potential buyers of its homes remained confident and that customer enquiries were up 6%. At the end of June forward sales of new homes were 5% higher than a year ago at £1.68bn.

“Consumer confidence remains resilient in our markets and attractive mortgage products provide compelling support to purchasers of new homes,” Persimmon said in a trading update.

Persimmon shares, which had fallen more than 10% in the previous month, rose 1.4% to £25.17 at 08:17 BST.

Business has boomed for Persimmon, helped by the government’s help to buy mortgage programme which underwrites part of the loan for buying a new home.

The company’s strong profit growth led to multimillion-pound payouts for chief executive Jeff Fairburn and his team that caused anger among shareholders. The company has said it will pay out more than £4bn to shareholders in surplus capital.

Persimmon bought 45 batches of new land in the first half to build about 11,000 new homes. But there are growing signs that the golden period could be over for housebuilders amid a slowing economy and a frozen wider property market. Berkeley Group said last month its performance had peaked and prepared shareholders for a big fall in annual profit.

Laith Khalaf, an analyst at Hargreaves Lansdown, said: "Persimmon is still selling more houses at higher prices, but business is not booming like it was last year.

"The UK housebuilding industry has been on a terrific run, fuelled by low interest rates, rising property prices, and the Help to Buy scheme. But some of the wind is now being taken out of the housebuilders’ sails.”