House-builders see sales plummet amid lockdown, but cheer recovery in demand

House-building giants Persimmon and Bovis Homes owner Vistry Group have laid bare the toll taken on sales during the coronavirus lockdown, but cheered recovering demand amid cautious home-buyers.

Charles Church builder Persimmon saw new home legal completions plunge 35% to 4,900 in the six months to June 30 as revenues also dropped 32% to £1.19 billion.

But it said building sites are now back up to normal levels of production, while demand is beginning to bounce back, with net reservations surging around 30% since its sales offices reopened in mid-May.

It was a similar picture at Vistry, which revealed that completions more than halved to 1,235 from 3,371 in the six months to June 30, but said there had been an “ongoing pick-up” in sales in the past two months, with prices remaining firm.

It comes after Chancellor Rishi Sunak announced a stamp duty cut on Wednesday, meaning buyers will pay no stamp duty on the first £500,000 of their purchase when they move home.

The move has been widely welcomed by house-builders for helping aid the sector’s recovery.

Companies saw reservation rates and sales tumble when the UK was placed in lockdown, while they temporarily shut construction sites despite being able to continue building.

Persimmon and Vistry began a phased reopening of their sites in April, while sales sites reopened in May as the wider housing market was kick-started.

Persimmon said customer demand in the six weeks since the reopening of its sales offices in England had been “positive”, with weekly average net private sales reservations of 278 new homes being around 30% higher year on year.

Selling prices in its first half were “resilient” at an average of around £225,050, up from £216,942 a year ago.

Group chief executive Dave Jenkinson said: “Our build programmes had returned to normal levels by period end, and we have seen encouraging sales levels throughout the period, in particular over the last six weeks when net reservations have been circa 30% ahead year on year.

“We enter the second half in a strong position, with work in progress well advanced, forward sales circa 15% ahead year on year, and cash holdings of circa £830 million.”

Vistry – rebranded from Bovis Homes following a £1.1 billion takeover of Galliford Try’s Linden Homes and Partnerships and Regeneration units in January – said that, despite plunging first- half sales, private home prices held up well at around £329,000.

But it warned that profit margins will be hit in the first half by the “wide-ranging effects of Covid-19”, such as additional costs during lockdown, lower levels of operating efficiency from social distancing, and longer build times.