Persimmon sales slump 56% as it blames rise in mortgage costs

Housebuilding giant Persimmon has revealed its Private forward sales slumped 56% to £500m, down from £1.1bn in 2021, as it claims that rising mortgage costs impacted performance. The group said it traded well in 2022, completing the sale of 14,868 new homes, towards the top end of previous guidance. Overall its build rates in the year tracked c. 8% ahead of 2021, with an average of 276 equivalent units built per week. It also confirmed the group's private average selling price increased by c. 5% to c. £272,200 (2021: £259,231) reflecting the mix of developments and house types sold along with overall house price inflation during the course of 2022. The Housing Association average selling price also increased by 8% to c. £142,000 (2021: £131,976). However, in line with the broader market, it said it saw “notably weaker customer demand” in the second half of the year as concerns over the economy, mortgage rates and the cost of living weighed heavily on consumer confidence. Overall in 2022 its private net sales were 0.69 per outlet per week for the year (2021: 0.83). The change in market conditions gathered pace in the final months of the period, with private net sales reducing to 0.30 per outlet per week in Q4 (Q4 2021: 0.77), with the last 7 weeks of 2022 at 0.19 per outlet per week (2021: 0.61). The company added that trading performance weakened across all geographies with the biggest impact on sales seen in its Southern regions. It saw a “particularly sharp fall” in demand on those sites where Help to Buy was more widely used once the scheme in England closed for new applications from 31 October. Dean Finch, group CEO, said: "Persimmon has delivered a strong performance for 2022 which has been achieved despite headwinds from supply constraints in the early part of the year and a more challenging sales environment in the second half. We delivered 14,868 new homes to customers in the year, towards the top end of our guidance, whilst maintaining five-star quality. Customers remain at the heart of our business with our continued focus on quality and affordability. "In the second half of the year, rising interest and mortgage rates, inflation and weaker consumer confidence began to impact customer behaviour across the housing market. This change in market conditions gathered pace in the fourth quarter and is reflected in the reduction in our recent weekly sales rates and a lower forward sales position as we enter the new financial year.” He added: “However, with high quality land holdings, a strong balance sheet and an experienced management team, Persimmon is well placed to navigate this challenging short-term backdrop, whilst continuing to take advantage of any opportunities that may arise. "The longer-term demand for new homes remains strong. We have made significant progress over the past two years in augmenting the Group's longstanding commercial excellence with renewed operational capabilities building a stronger, more sustainable business for the future.”

Persimmon sales slump 56% as it blames rise in mortgage costs

The company added the trading performance weakened across all geographies with the biggest impact on sales seen in its Southern regions

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