Persimmon, a leading housebuilder, has announced its plans to construct between 10,000 and 10,500 homes this year. This news serves as a positive indicator of recovery, especially considering the challenging economic backdrop marked by high interest rates.

Persimmon revealed that it had a strong start to the year, with forward sales totaling £1.75 billion in the first quarter, surpassing the previous year’s £1.69 billion. Despite a slight decrease in new home completions compared to last year — 1,027 homes completed this year versus around 1,127 the year before — the company remains optimistic.

Dean Finch, Persimmon’s Group Chief Executive, expressed satisfaction with the company’s performance, highlighting that “Our first quarter performance was in line with expectations, and we saw an improvement in sales rates alongside firm pricing.” He also noted an 18% increase in the private forward order book from the previous year, which now stands at £1.14 billion.

A Focus on Quality and Expansion

Finch emphasised the company’s ongoing efforts to expand its outlet network and to enhance quality and customer service. He underscored the intention to transform more land holdings into active developments, ensuring that the business is well-positioned for future success.

Market Context and Challenges

The broader property market has felt the impact of persistently high interest rates, which currently stand at 5.25%, coupled with increasing mortgage costs. These factors have squeezed personal finances and slowed the market. Nonetheless, sentiment in the housing sector has seen some improvement.

Oli Creasey, a property analyst at Quilter Cheviot, provided further insights, stating that “While the sales rate is moving in the right direction it is still around a third lower than the rates achieved in Q1 2022 when interest rates were significantly lower.” He also noted a 6% increase in the average sale price within the forward order book, signaling positive trends despite the current economic pressures.

Future Expectations

Creasey further explained that the sales are expected to convert later in the year, and both volumes and sale prices are anticipated to pick up in the second half of the year. This expectation aligns with sentiments from other industry players, including Taylor Wimpey’s executive team, which suggests a potential uplift in market activities as the year progresses.