In its quarterly results, the firm warned that sales to first-time buyers are “more challenging” and pointed to “stretched affordability and reduced mortgage availability at higher LTVs”. Persimmon said that that this was particularly acute in regions with higher house prices.
The firm said that while the outlook remains uncertain it was “encouraged” by the level of visitors to its sites and the normalization of cancellation rates, which had led to a steady improvement in sales in the first few months of the year.
The firm added that if sales rates continued at current levels in the year to date full-year volumes would be around the top end of 8,000 to 9,000 completions.
The housebuilder said longer-term there were “excellent opportunities” for the business and there was a “good pipeline of new sites” expected to come through next year that would “generate growth in our outlet position”.
“With this growth in outlets, and signs that the improvement in consumer confidence is being sustained, we anticipate a return to volume growth and expansion of margins in 2024,” it added.
Persimmon continued: “The group entered this period of uncertainty with a strong balance sheet, including a robust cash position and industry-leading embedded margins in our land holdings.
“The longer-term demand outlook for new homes remains favourable and we will continue to position the business for success in the future, maintaining our focus on quality and customer service and converting our land holdings into active developments as we look to grow our outlet position over the medium-term.”
Persimmon current forward sales at £1.7bn
Persimmon said that its current forward sales position was £1.7bn. against £1.4bn in Q1 last year.
The company said that this was partially due to the “challenging trading environment” in the second half of last year leading to lower sales rates and elevated cancellation rates.
It noted that sales rates and cancellation rates had been stable over the past few weeks but it was too early to tell if they will “follow normal seasonal patterns during the remainder of the year”.
Persimmon added that overall pricing had “remained firm” with the group’s private average selling price on completions 10 per cent up on Q1 last year and up four per cent on the last quarter of last year.
