- Fall out from Budget still being assessed
- Timing of future UK interest rate changes uncertain
- Signs of build cost inflation for 2025
Shares in Persimmon (PSN) fell nearly 6% to £13.83 in morning trading despite the UK’s second largest housebuilder saying it was on track to grow completions to circa 10,500 for the full year.
During the third quarter the company delivered 1,416 homes including a 3% increase in private homes to 1,267 and 149 partnership homes.
The company said the demand for homes had continued well into the autumn selling season helped by improvements to customer sentiment.
This reassurance didn't convince investors.
Persimmon went on to say that it might experience rising costs next year in relation to building new homes.
‘We are working closely with our supply chain to manage our costs, which will also be impacted by new building regulations and the employer national insurance increases announced in the recent Budget.’
Persimmon was hopeful that it might be able to mitigate the impact of cost increases through ‘commercial controls’ and ‘management actions.’
EXPERT VIEW
Russ Mould, investment director at AJ Bell said: ‘Costs are back on the rise and the company is warning of a potential impact from the Budget on this front too. The changes to stamp duty are broadly unhelpful to the business.
‘If property prices soften then the company and housebuilding industry are back to facing the unhelpful cocktail which saw their shares come under significant pressure in recent years. Persimmon’s margins are already below long-term averages as it is.
‘Worryingly, Persimmon’s latest trading statement did not build much confidence. The hope will be that people have been holding off ahead of the Budget and will now be ready to make purchases again.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell.
