Persimmon defies Brexit with 29% profit leap

by: Carmen Reichman
  • 23/08/2016
  • 0
Persimmon defies Brexit with 29% profit leap
Housebuilder Persimmon has shrugged off Brexit fears of a market slowdown as it reported a 29% profit increase backed by a sharp rise in reservations in the first half of the year.

Persimmon – the UK’s largest house builder by value – posted pre-tax profits of £352.3m in the six months to June, up from £272.8m in the same period last year.

At the same time reservations were up 17% since July compared with the same period last year, according to its half yearly results published on 23 August.

The firm said it was encouraged by the robust level of customer demand it had seen for its properties despite the Brexit referendum on 23 June, which had created economic uncertainty.

Group chief executive Jeff Fairborn said: “While the result of the EU Referendum has created increased economic uncertainty, customer interest since then has been robust with visitor numbers to our sites around 20% ahead year on year.

“Our private sale reservation rate since 1 July is currently 17% ahead of the same period last year. The group is now trading through the traditionally slower summer weeks but customer demand remains encouraging and we anticipate a good autumn sales season.”

Persimmon’s results, which only include a week post-referendum, appear to refute the home buying slowdown widely reported following the EU vote.

The Royal Institution of Chartered Surveyors (RICS) for instance, said earlier in August the monthly pace of transaction in July and June had declined at the fastest rate since 2008.

Buyer enquiries, agreed sales and new instructions all fell after the shock result, the body’s latest UK residential survey found, which, it said, had led to a dip in UK house price growth.

The survey, which is based on surveyor sentiment, found London had suffered the biggest fall with a price indicator drop of -33%.

This was backed by analysis from property investment firm London Central Portfolio, which found planning approvals for new-build units in inner London were on the up while falling sales highlighted a diminishing appetite from buyers.

The firm warned of a growing imbalance of supply and demand particularly in inner London, and the knock on effect it could have on the general housing market.

“In light of the plethora of tax hits over the last few years, possibly exacerbated by the uncertainty of Brexit, it appears foreign investors, the majority of the buyers of new developments, may finally be turning away,” chief executive Naomi Heaton said.

However, Persimmon said its legal completions and average selling price were both up 6%. The firm, which is headquartered in York and builds houses across the country, mostly outside of London, sold 7,238 new homes in H1 with an average selling price of £205,762.

Overall, it reported a 12% rise in revenues to £1.49bn from £1.33bn in 2015.

In a separate report out in August, ratings agency Fitch said major housebuilders would escape the impact of any price declines following Brexit because of record backlogs and limited exposure to the London market.

It said firms such as Taylor Wimpey were sufficiently diversified away from London and south east England to withstand any major falls in demand coming from those markets after the EU Referendum.

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