Housebuilder Persimmon has sounded a note of cautious optimism despite seeing sales fall by a third and its cash position more than halve during a difficult year in the housing market.
The York-based firm has released a trading update for 2023 in which it revealed a 33% drop saw its new home completions fall from almost 15,000 a year earlier to just under 10,000. The company’s cash position fell from £862m to £420m during the year.
Persimmon is not alone among housebuilders to have seen a tough time in 2023, with rising interest rates and wider problems in the UK economy hitting demand. Builders have also had to contend with sharp price inflation.
Read more:sales fall sharply at MJ Gleeson
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But it said its results were ahead of expectations, while a year-on-year improvement in Q4 sales and a 2% rise in its forward sales position gave cause for optimism. It warned, however, that “we anticipate market conditions will remain highly uncertain during 2024, particularly for first-time buyers and with an election likely this year.”
Group chief executive Dean Finch said: “Persimmon performed well in challenging market conditions, delivering completions ahead of expectations in 2023 alongside enhanced quality metrics of our already five-star homes. Persimmon’s offering is resonating well with customers with sales rates relatively robust throughout the year.
“We have successfully balanced our need to control costs, whilst investing in the business to position it for sustainable growth when conditions improve.”
Persimmon’s trading update revealed that the average price of its private houses sold in 2023 rose 5% to £285,770, though it had to introduce some incentives to buyers in the second half of the year. It reduced its spending on land to £430m during the year but said it had achieved planning permission for around 11,000 new homes and was making progress on getting sales back to pre-Covid levels in the medium term.
The company said: “The longer-term demand outlook for new homes remains favourable. As a five-star builder, with private average selling prices below the market average, high quality land holdings, and a robust balance sheet, Persimmon is well-positioned for sustainable growth when conditions improve.”
Persimmon’s update comes a day after fellow Yorkshire housebuilder MJ Gleeson also noted a slump in sales but said that there were signs a recovery could be on the way.
