Persimmon saw housing completions fall by 36% in the first half of this year.

The company’s H1 results, published today, reveal it sold 4,429 houses up to June 30, down from 6,652 during the same period in 2022.

Revenue in H1 fell by 30% compared to the first six months of last year, while pre-tax profits also dropped by 66%.

Persimmon puts the decline down to the economic turmoil that followed chancellor Kwasi Kwarteng’s mini budget in November last year.

It also says the removal of the Help to Buy scheme, together with rising interest rates and market uncertainty played a part.

InvestingReviews.co.uk equity analyst John Choong, described the declines as ‘gut-wrenching’.

Oli Creasey, equity research analyst at Quilter Cheviot, says the results were ‘as expected’.

He says: “Despite only selling 4,249 houses in H1, the company has increased guidance for full year volumes to at least 9,000 suggesting volumes will be at least 105 higher in H2.

“Given the fall in volumes vs 2022, the company’s operating margin has been hit, almost halving to 14%.

“However, Persimmon is doing its best to control costs with cost inflation remaining around 5% but is expected to moderate in H2.”

Persimmon Homes group chief executive Dean Finch says: “Against a backdrop of higher mortgage rates, the removal of Help to Buy and significant market uncertainty, Persimmon has delivered a robust sales rate excluding bulk sales whilst growing the private average selling price in our forward order book and also securing cost savings.

“We are on track to deliver profit expectations for the year and are building a platform for future growth.”

However, Choong, says: “Persimmon has revealed some gut-wrenching drops in its latest results as mortgage rates continue to strangle affordability, especially for first-time buyers, who represent the bulk of Persimmon’s customer base.

“The higher percentage of more expensive properties has helped to offset the astronomical decline in completions slightly.

“Even so, the short-term outlook for Persimmon isn’t bright as mortgage rates hover around their highest levels since 2008.”

He says those seeking a ‘glimmer of hope’ will find some encouragement in the company’s forward sales position.

“Forward private sales — which yield higher-valued properties — are up 83% since January, he adds.

“This should provide some support to Persimmon’s top line, helped by the slight uptick in private average selling prices as well.

“The recent cuts in mortgage rates by several major lenders are promising, but the future trend of rates is heavily dependent on next week’s wage growth and inflation data.

“Any unwelcome surprises could trigger yet another round of turmoil for the housing market and Persimmon.”