Reuters
Published Nov 07, 2023 07:19
Updated Nov 07, 2023 15:56
By Aby Jose Koilparambil
(Reuters) -British homebuilder Persimmon (LON:PSN) will build more homes this year than it previously expected, but market conditions are "highly uncertain" for 2024 as mortgage and living costs deter buyers, it said on Tuesday.
Improved sales since start of October have left Persimmon upbeat compared with peers Barratt and Vistry, which last month flagged challenges in the British housing market.
Shares in Persimmon rose by more than 3% in early trade, also helped by positive housing data from mortgage lender Halifax, which said British house prices ended six months of consecutive falls in October.
Adding slight relief to the housing industry, the Bank of England last week kept interest rates steady at a 15-year high of 5.25% for the second meeting in a row, but said it did not expect to cut them soon.
For much of this year, high mortgage rates have limited sales, forcing builders to warn on profits while the UK economy struggles with sticky inflation.
Persimmon said overall pricing was "broadly stable", but private average selling prices in its order book had fallen slightly and build cost inflation had been more stubborn than expected at the start of the year.
It said the private sales rate improved over the last five weeks to 0.59 units, compared with 0.45 homes in the corresponding period last year.
The company's homes range from studio apartments to five-bedroom houses.
As part of the group-wide recruitment freeze implemented earlier this year, Persimmon said the headcount was likely to decrease by about 700 during 2023.
The FTSE 250 company, based in York, northern England, said on Tuesday it expects to build 9,500 homes in 2023, above its August forecast of 9,000 units and annual operating profit to be in line with market expectations of an about two-third slump from year ago.
"The update points to a bit of a pickup in sales rates since the start of October, which is encouraging but does seem to reflect increased marketing and more selling incentives," wrote Investec analysts in a note.
Written By: Reuters
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