According to Persimmon’s full-year results, new home completions came to 14,868, which is up from 14,551 in 2021.
New housing revenues from Persimmon rose to £3.7bn in 2022, which is an increase from £3.45bn in 2021.
The new home average selling price was £248,616, which is an increase of around five per cent year-on-year. The firm said that it reflects house price inflation and a “more sophisticated approach to pricing in local markets”.
It added that its current forward sales position was £1.52bn, which is around half its figure in 2021 at £2.21bn. This includes around £810m in private average sales.
Its forward sales position was around 0.3 in Q4 last year, which compares to 0.77 in the same period in 2021. The firm said this showed a significant drop in private sales rates in the last quarter but cancellation rates had reverted back to “typical historical levels”.
Sales rates improved in the first eight weeks of the year to 0.96 but Persimmon said this was “significantly below” the same period last year.
It added that if current rates continued, it would lead to around 8,000 to 9,000 legal completions this year, which it said would have a marginal impact.
The firm added that of 73 developments identified as needing remediation, work is underway or complete on 41 with the rest to have work started at the end of this year.
It has also increased its provision for building safety fees to £350m, which led to a £275m exceptional charge for the year.
‘Tough year’ due to lessened housing demand
Roger Devlin, chairman of Persimmon, said 2022 was a “strong year” for the company, but 2023 could be a “tough year”.
He said there would be a “sharp fall” in the number of completions and a “decline in profitability”, which he attributed to diminished demand for housing due to higher mortgage rates and challenging economic circumstances.
However, Devlin said he was “very confident” about the long-term prospects for the company.
“We are constantly reminded by the political classes of the national need for 300,000 homes to be built every year. I expect the outturn for 2023 may not be much more than half this number. Therefore we anticipate that our company will be a beneficiary of strong pent up demand when the economic and housing cycles turn in our favour eventually,” he added.
This was echoed by Persimmon’s chief executive Dean Finch who said the “longer-term fundamentals of the UK housing market remain strong” as “demand for new housing will remain”.
“The key current challenges are affordability and mortgage product availability. While there has been some recent easing in mortgage rates from their high at the end of last year, the majority of respected forecasters do not expect them to return quickly to the levels seen during the previous cycle,” Finch added.
