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Persimmon profits plummet 52% as it says market will remain ‘challenging’ in 2024

Persimmon profits plummet 52% as it says market will remain ‘challenging’ in 2024
Samantha Partington
Written By:
Samantha Partington
Posted:
12/03/2024
Updated:
12/03/2024

Housebuilder Persimmon says it is braced for 2024 to be another “challenging year” as first-time buyer affordability remained constrained, posting a 52% decline in full year profits.

In the full-year results from Persimmon for the year ended 31 December, its profit before tax fell from £730.7m to £351.8m.

Underlying profit fell by 65% to £354.5m, which the builder attributed to lower volumes and build cost inflation.

Year-on-year (YOY), new home completions dropped by 33% from 14,868 to 9,922.

In his chairperson’s statement, Roger Devlin wrote: “As expected at the start of the year, the number of new home completions and profit delivery of the group was significantly down on the prior year, reflecting a difficult macroeconomic backdrop.

“While demand remains high, affordability and mortgage availability has been difficult for many of our customers, especially first-time buyers. Thankfully, there has been some stabilisation in recent months, with mortgage rates having fallen from their peak in July 2023.”

Despite the poor full-year results, Devlin said he remained confident of the long-term prospects for Persimmon.

“There is no doubt that the country continues to face a significant housing shortage, with a growing population, continuing migration and household formation as well as a sizeable amount of old housing stock,” he added.

Homebuyer demand remained varied across the country in 2023. Trading in the southern and eastern counties remains more challenging with weaker pricing, while trading in northern regions was more robust.

In areas of sluggish demand, Persimmon is using incentives such as part-exchange schemes to encourage buyers to reserve homes.

The housebuilder said that, with interest rates expected to remain at current levels and a general election looming, it expected market conditions to remain subdued throughout 2024.

In its trading outlook, the group said: “While we are prepared for 2024 to be another challenging year, we are confident of our ability to manage this. The longer-term fundamentals for the housing market remain positive.”

The builder’s forward sales book ended the year at £946m up from £908m at the close of 2022.

Persimmon said it remained on track to open 30 new homes outlets for the spring sales season and it continued to work towards growing its sales outlet base back to over 300 over the medium term.