Housebuilder Persimmon tops build targets after strong fourth quarter

(Sharecast News) - Persimmon was able to beat guidance with new home completions in 2023 after a decent fourth quarter, with the housebuilder entering 2024 in a strong position with private forward sales ahead of last year. New home completions totalled 9,922 last year, down 33% on 2022 on the back of challenging market conditions with the whole industry being impacted heavily by rising mortgage rates. However, that was ahead of the 9,500 target given in November.

"This was achieved while providing exceptional service to our customers and we are proud to have maintained our five-star Home Builders Federation rating. We have further improved our quality metrics in the year to what we believe are our best ever, with a 43% improvement in reportable items per home in 2023, as measured by the NHBC," the company said.

Average selling prices improved by 3% year-on-year to £255,750, with private selling prices up 5% at £285,770. Pricing was firm in the first half, but softness and increased discounting was seen int he second half.

As expected, full-year operations margins are expected to be in line with the first half at 14%, as a result of build cos inflation, lower volumes and one-off costs to do with the remediation of a small number of completed sites and accelerated exit from two sites, along with further investment in the business.

The current forward sales position stood at £1.06bn at the end of December, up 2% on 2022, with private forward sales rising 4% to £499m.

"We anticipate market conditions will remain highly uncertain during 2024, particularly for first-time buyers and with an election likely this year," Persimmon said.

"However, mortgage rates are beginning to ease, and the response to our recent Boxing Day campaign has been positive, generating a substantial number of leads for our sales teams. Encouragingly, build costs continue to moderate which will benefit completions in 2024."