Persimmon buoyed by “robust” demand despite Brexit

Persimmon shares were up by around four per cent and other builders followed its lead.

Mortgage funding remains at “compelling levels”, the company said, and its private-sale reservations since July 1 is 17% ahead of the same period past year.

George Salmon, equity analyst at Hargreaves Lansdown, said: “With analysts already confident that Persimmon would report strong numbers for the first half, all eyes were on what the group would say about trading since the European Union referendum”.

The business also announced that legal completions climbed by 6 per cent to 7,328 new homes sold, and the average selling price of a property was up by 6 per cent to £205,762.

Pretax profit for the period beat analysts’ expectations, climbing 29% from a year earlier to GBP352.3 million, helped by a 12% rise in revenue to GBP1.49 billion.

During the half-year, it secured 7,108 plots of new land, bringing its consented land bank to 93,519 plots. “The group is now trading through the traditionally slower summer weeks but customer demand remains encouraging and we anticipate a good autumn sales season”.

However, Persimmon added that it will “remain cautious” with respect to new land investment in the face of uncertainty created by the vote. The order book was 2% ahead of previous year at 1.75 billion pounds ($2.29 billion).

“The shares trade at a justified premium”, Liberum said.

Analysts at Peel Hunt said: “The outlook statement is by far the most confident we have seen from the housebuilding sector since the referendum”.

Persimmon’s chief executive Jeff Fairburn said that, despite increased uncertainty, customer interest since the vote has been “robust”.

On top of that, the United Kingdom central bank has recently lowered its base rate to 0.25%, making it cheaper to get mortgages. We are encouraged by the continued healthy demand for mortgage support with lenders approving c. 198,000 loans for house purchase during the second quarter of the year, a very similar number when compared with the same period last year which was buoyed by last year’s general election result.

Razak Musah Baba contributed to this article.