UK housebuilder Persimmon has warned its new residence gross sales may fall by as much as 40 per cent this yr if demand stays as it’s now, sending its shares down nearly 10 per cent.
The FTSE 100 group, one of many UK’s largest housebuilders, stated if present tendencies continued all through 2023, gross sales may fall to eight,000 in contrast with greater than 14,000 final yr.
However the firm harassed it was too early to supply agency steerage. The property market slowed sharply final yr after mortgage lenders put up charges in response to fallout from the UK “mini” price range in September.
“The important thing present challenges are affordability and mortgage product availability,” stated Dean Finch, Persimmon chief government. “It’s too early to evaluate gross sales charges for the yr as an entire.”
UK housebuilders have already reduce on land purchases and constructing new property because the market has slowed. The Residence Builders Federation stated this week that offer may hit its lowest ranges because the second world battle within the coming years, due to greater mortgage charges and environmental and planning regulation.
Persimmon had a robust yr for gross sales for many of 2022, serving to to push underlying revenue earlier than tax up 4 per cent to £1bn, however gross sales slowed in the direction of the top of the yr.
“The gross sales charges seen over the past 5 months imply completions shall be down markedly this yr and as a consequence, so will margin and income,” Finch stated, however added: “We imagine 2023 will symbolize the ground in our volumes. The long term fundamentals of the UK housing market stay robust.”
The board really useful a dividend of 60 pence a share for the yr, down 75 per cent from final yr.
Mortgage supplier Nationwide additionally revealed UK-wide home worth information on Wednesday. These confirmed the most important decline in a decade between February this yr and final yr, of 1.1 per cent. It was additionally the primary annual decline since June 2020 when the housing market was all however frozen by the Covid-19 lockdown.
Housing secretary Michael Gove modified authorities housebuilding targets in December to make it simpler for native councils to cut back or reject developments, in response to complaints from Tory MPs.
Roger Devlin, Persimmon chair, stated housebuilders would possible fall behind authorities targets for brand spanking new housing provide. “We’re consistently reminded by the political lessons of the nationwide want for 300,000 properties to be constructed yearly. I anticipate the [figure] for 2023 might not be far more than half this quantity,” he stated.