- Net private reservations rise in first quarter
- Forward sales up from £1 billion to £1.7 billion
- Full-year completions could reach top end of range
Investors took heart from the latest trading update from leading housebuilder Persimmon (PSN), which reported an improvement in first-quarter trading and hinted full-year completions could be towards the top of its guidance.
The shares jumped to the top of the FTSE 100 leader board with a gain of 75p or 6% to £13.11, pulling shares of rivals Barratt Developments (BDEV) and Taylor Wimpey (TW.) along with them.
A DIFFICULT START TO 2023
The firm started the year with a much-depleted forward sales book of £1 billion, down 36% on the previous year, as the financial turmoil of the second half of 2022 took its toll on new sales and led to a spike in cancellations of agreed sales.
As a result, new home completions in the first three months were down 42% to just 1,136 units against 1,950 units in the same period a year ago with private completions down 45% from 1,631 to 902 and affordable housing completions down 27% from 319 to 234 homes.
At the same time, build cost inflation continues to run at 8% to 9% which is having ‘a significant impact’ on profit margins this year.
SIGNS OF IMPROVEMENT
There was good news, however, as net private sales rose from 0.3 per outlet per week in December to 0.62 in the first quarter, and the firm was able to push through price rises, although with discounts and mortgage-free campaigns average selling prices were lower than last year.
The forward sales position was up to £1.7 billion at the end of March, of which £1 billion related to private sales against £500 million in December, with a private average selling price of £276,200 against £282,100 last quarter.
‘Customer interest remains good, with our marketing campaigns continuing to generate healthy traffic to site and online’, said chief executive Dean Finch.
He added: ‘Sales rates and cancellation rates have been stable over the past few weeks although it is too early to tell whether they will follow normal seasonal patterns during the remainder of the year.’
That said, if sales rates continue at the level seen year-to-date, the firm said 2023 volumes could be ‘towards the top end’ of its previous guidance of 8,000 to 9,000 completions.
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