Persimmon buoyed by ‘healthy’ demand amid supply chain disruption

Housebuilding giant Persimmon has cheered “healthy” home buyer demand despite the stamp duty holiday ending as it also weathers ongoing supply chain woes and rising build costs.

The Charles Church group said it has taken the changes to the stamp duty and Help to Buy scheme “in its stride”, with private new home sales reservations around 16% higher than 2019 levels between July 1 and November 8.

It added it expects to grow completions by about 10% this year, while it also has forward sales of around £1.15 billion beyond 2021.

Persimmon said it continues to “manage the current industry supply chain difficulties well”, with its profit margins offsetting a 5% hike in build costs as a result of the disruption.

In a separate update on Tuesday, rival Vistry said it was seeing some signs of improvement in the supply chain.

But Vistry – formerly Bovis Homes – sees build costs rising by around 4% to 5% over the next 12 months as labour shortages are set to continue even as materials pressure reduces.

The sector has seen projects delayed due to shortages of workers and materials, with costs rising across the board.

But house price hikes have been helping offset the extra costs of materials.

Persimmon said its Brickworks, Tileworks and Space4 timber frame manufacturing facilities were also helping it secure vital supplies and mitigating some of the wider cost increases.

Dean Finch, group chief executive of Persimmon, said: “Persimmon continued to perform well through the period against a backdrop of healthy demand, with private sales reservation rates per site remaining well ahead of 2019, as sales followed a more normal seasonal pattern as expected when compared to 2020.”

He added: “Healthy selling prices and our off-site manufacturing capabilities are mitigating inflationary pressures.”

Vistry said sale prices have been rising “more modestly” since the beginning of July, as the end of the stamp duty relief has taken some of the heat out of the property market.

It still expects 2021 profits in line with management expectations, at about £345 million.

Vistry’s average weekly private sales rate edged higher to 0.77 for the year to date, slightly ahead of the 0.76 reported for the first half.