A positive third-quarter trading update and evidence of a bounce in house prices helped lift shares in Persimmon (PSN) and other developers from their recent lows.

Persimmon added 2.5% to £11.09 while rivals Barratt Developments (BDEV) and Taylor Wimpey (TW.) gained around 1.5% apiece.

HIGHER FULL-YEAR COMPLETIONS

For the three months to the start of November, Persimmon completed 1,439 new homes against 2,270 homes in the same period last year, in line with expectations, while its average selling price was 2% higher at just under £297,000 although that included a 20% jump in partnership prices.

The current forward sales position of £1.62 billion is 23% lower than a year ago, but chief executive Dean Finch said he was confident the firm could deliver 9,500 new homes this year, against a previous forecast of around 9,000 units, ‘with operating profit in line with expectations and at an operating margin similar to the first half’.

The all-important net private weekly sales figure per outlet dipped to 0.46 from 0.61 last year, but over the last five weeks that rate increased to 0.51 net of ‘investor’ sales where Persimmon sells to operators in the private rented sector.

The firm gave no outlook for 2024 beyond saying it expected the market to stay ‘highly uncertain’, but said the longer-term fundamentals remained positive and it planned to open more selling outlets next Spring.

PARTNERSHIPS UNDERPIN SALES

Housebuilder Vistry (VTY) announced today it had signed a ‘substantial partnership agreement’ with two housing groups backed by Blackstone and Regis.

The agreement will see the two firms buy 2,915 units for a total gross development value of £819 million, with the homes located across Vistry’s 70 sites and construction expected to start this year.

The deal breaks down into 1,522 homes for the private rented sector and 1,393 affordable homes for rent and shared ownership.

Chief executive Greg Fitzgerald said partnership deals gave the group ‘significantly greater visibility on earnings than traditional housebuilders’ and were key to delivering the £1 billion of shareholder distributions he promised over the next three years.

At the same time, developer Galliford Try (GFRD) revealed it had been contracted to deliver another 286 apartments at a new build-to-rent development at Brent Cross in north London for £87 million.

The firm already had a contract to build 249 new homes in a deal with Related Argent and Barnet Council.

HOUSE PRICES TICK HIGHER

Completing the picture for housebuilders, the latest Halifax HPI (house price index) showed average home prices rising by 1.1% in October after six months of consecutive falls.

In general, the figures suggested prices were strengthening due to lack of supply rather than higher demand, but the first-time buyer market looks fairly resilient with prices falling less than the overall market on an annual basis.

The Halifax data tallies with both the Nationwide index, which registered a 0.9% increase in average prices last month, and Rightmove (RMV) asking prices which rose by 0.5% last month, all of which suggests the market is stabilizing after several months of falls.

---