Saturday 21 September 2019

Persimmon sees sales slide and warns over rising build costs

The UK’s second-largest house-builder followed rival Taylor Wimpey in saying it will cost more to build homes.

Persimmon warned of an increase in building costs after seeing a fall in sales (Mike Egerton/PA)
Persimmon warned of an increase in building costs after seeing a fall in sales (Mike Egerton/PA)

By Henry Saker-Clark, Press Association City Reporter

House-building giant Persimmon has revealed a drop in forward sales and became the latest group to warn over rising build costs.

The Charles Church owner said total forward sales revenues had declined to £2.7 billion, from £2.8 billion over the same period last year.

Its weekly private sales rate declined 5% in the four months of the year to date, it said, as it was affected by changes in its marketing practices.

The UK’s second-largest house-builder also followed rival Taylor Wimpey in saying that it will cost more to build homes.

Persimmon said construction costs would rise by around 4% this year, including investment to enhance specifications and improve customer satisfaction.

The firm’s decline in forward sales came as it said it had taken a “targeted approach” to marketing properties at a more advanced stage in the process, reducing the number of sales reservations so far this year.

But Persimmon said the UK housing market had remained resilient during the year so far, with high levels of employment and low interest rates continuing to support consumer confidence.

It said: “With mortgage lenders continuing to offer attractive products, the level of customer activity has been encouraging, with visitor levels to site, sales conversion rates and cancellation rates all running in line with our expectations.”

Prices have remained strong across regional markets, it said, with the average selling price rising slightly to £237,850 from £236,500 last year.

The developer said it is investing to improve customer satisfaction, after facing a barrage of recent criticism over build quality.

It scored the worst figures of all the major house-builders in the latest Home Builders Federation new homes survey.

Last month the property firm launched a review of its house quality and customer care functions.

It also faced an investor revolt last year after paying big bonuses to senior executives and enjoying a substantial rise in profit on the back of the Government’s Help To Buy scheme.

Former chief executive Jeff Fairburn faced particular criticism after refusing to answer questions over his own proposed £110 million bonus package. He was eventually awarded £85 million over two years.

Persimmon’s shares fell 0.8% to 2,219p in early trading on Wednesday.

PA Media

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