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Highlights
- Persimmon delivered 1,416 homes in Q3, maintaining progress toward a full-year target of 10,500 completions.
- Private forward sales increased 40% to £1.45 billion, supported by stable market conditions and early multi-year reservations.
- The company continues to address fire safety remediation, with 72% of projects underway or completed.
Persimmon Plc (LSE:PSN) has released a trading update for the period since July 1, 2024, indicating solid performance in line with expectations. The housebuilder remains on course to deliver approximately 10,500 home completions for the year, building on a strong sales and reservations performance throughout the third quarter.
Home Completions and Sales Performance
In the third quarter, Persimmon completed 1,416 homes, slightly down from 1,439 in the same period last year. The figure included a 3% increase in private homes to 1,267, offsetting a decline in Partnership homes to 149. The net private sales rate per outlet increased by 37%, standing at 0.70, or 0.61 when excluding bulk sales. Year-to-date private reservations since January 1 are up 24% compared to 2023, reflecting steady demand across all regions.
Customer interest has remained robust, supported by successful marketing campaigns that drive online traffic and footfall to Persimmon’s development sites. The company notes that affordability challenges, especially for first-time buyers, have been alleviated by lower interest rates and a wider availability of high loan-to-value mortgage products compared to a year ago.
Financial Stability and Pricing
Persimmon's private forward sales position has strengthened, rising 40% to £1.45 billion, buoyed by more stable market conditions and strategic multi-year sales reservations. The private average selling price in the forward order book has increased to approximately £291,400, up from £278,500 in Q3 2023 and significantly higher than the £266,100 figure at the end of last year.
The company invested £123 million in land acquisitions during Q3, up from £78 million in 2023. Of this, £47 million was allocated to settle land creditor obligations. Persimmon holds approximately 81,500 plots of owned and controlled land as of September 30, 2024, and reports a strong embedded margin in its land portfolio. It expects to maintain a cash balance of between £100 million and £200 million by year-end.
Fire Safety Remediation and Regulatory Impact
Persimmon has been actively working on fire safety remediation, with 72% of identified developments either underway or completed. The company aims to complete most of these projects within the next two years.
Looking forward, Persimmon is cautiously optimistic, noting that demand has carried into the autumn selling season, aided by improving customer sentiment as interest rates stabilize. The company anticipates further growth in outlets and volume in 2025, although the potential impact of future interest rate changes and the implications of the recent Budget remain areas of uncertainty.
Cost Management and Inflation Challenges
Persimmon acknowledges emerging signs of build cost inflation in negotiations for 2025 and is closely collaborating with its supply chain to manage expenses. Cost pressures are expected from new building regulations and national insurance increases outlined in the Budget. The company is implementing robust commercial controls and management strategies to mitigate these impacts.
