Persimmon – getting stronger, brick by brick

Aarin Chiekrie, equity analyst, Hargreaves Lansdown: “Persimmon’s had a great first half to the year, despite the ongoing affordability issues weighing on buyers’ purchasing power. Revenue growth came from a healthy mix of both higher sales rates and average selling prices. Given Persimmon’s houses are typically cheaper than the UK average, its selling prices were always likely to prove more resilient than other names in the sector during tough times. The private order book has also climbed at double-digit rates, indicating that buyers are more confident about the market’s health than they were 12 months ago and are more willing to sign on the dotted line. Alongside its in-house materials business, which is a key differentiator against peers, Persimmon’s profitability looks to be holding up better than most this year too.

Announcements by the new government, particularly around a reform to the national planning framework are encouraging signs for the whole housebuilding industry. Persimmon says it’s seeing consumer confidence improving, with a strong pick up in enquiries and visitors at its sites. The recent rate cut by the Bank of England should help keep this momentum going into the second half. Persimmon’s on track for completions to come in at the top end of guidance, which calls for around 10,500 new homes over the full year. That target looks achievable and would lay some solid foundations for growth heading into 2025.”