UK housebuilder Persimmon has reported 4,445 new home completions in the first half of 2024, up 5%, including a 14% increase in private completions to 3,742 homes.

The company is on track for completions of 10,500 for the full year, at the top end of previous guidance and with a current private forward order book up 28% year on year to £1.12bn.

Persimmon achieved detailed planning on around 6,000 plots year to date (135% of H1 completions) and said it was encouraged that 1,000 of these were achieved in July following the new government taking office.

The housebuilder revealed that it’s new home average selling price was £263,288 compared to  £256,445 for H1 2023.

Commenting on the latest figures Persimmon chief executive Dean Finch said: “The first half of the year has been strong with improved sales rates and robust average selling prices, despite ongoing affordability challenges.”

He added: “Strengthening consumer sentiment, improving macro-economic conditions and the government’s welcome and ambitious planning reforms that demand more of the high quality, affordable homes that are Persimmon’s core strength, are all supportive of our ambition to grow this year and in the future. We are opening more sites this year and will do the same next year, demonstrating the benefit of our continued land investment in recent years.”

Tailwinds for housebuilders

Interactive Investor head of markets Richard Hunter commented: “Persimmon’s previous actions have left it with much to build on, especially given clearly improving market conditions for the housing sector.

“It is probably too early to be calling a full recovery, but it is also fair to say that some of the previous headwinds are showing signs of turning into tailwinds. Build cost inflation, for example, which had been a bugbear and peaked at around 10% a couple of years ago, has been slowly decreasing and indeed is now broadly flat in the year to date. Part of this has been achieved through Persimmon’s unique ability to manage costs through its ownership of brick, tile and timber frame factories which guarantees a cost-effective and resilient supply of building materials.”

He added: “The group is also encouraged by the new government’s early announcements on the sector in general, and particularly with regard to planning, which had previously hampered opportunities to growth. Although such amendments will take time to wash through, Persimmon has noted a bounce in planning permissions since the government took office last month.”

Confidence in housing sector

Wealth Club fund manager Charlie Huggins also saw reasons for cautious optimism: “These are solid first half results from Persimmon with improved sales and robust average sales rates.”

He added: “There are signs that confidence is returning to the housing market. Interest rates have finally started to be cut, mortgage rates are coming down and a landslide labour victory provides further fuel for optimism, particularly given their pro-housing agenda.

The wild card is the global economy. Fears of a global recession intensified at the start of this week. On the one hand this might be a good thing for housebuilders, accelerating the pace of rate reductions. But if the economy weakens too much, banks might curtail mortgage lending, which would be far from ideal. Time will tell.”

AJ Bell investment director Russ Mould pointed out that while Persimmon did specifically reference recently loosened planning laws alongside its first-half results, the big driver was ultimately signs of improved demand – with the Bank of England’s first rate cut representing a significant moment.

“The housebuilding sector is heavily reliant on the availability of affordable mortgages and, from that point of view, the trajectory of borrowing rates is heading in the right direction.”