Persimmon warns about housing market as future sales slump

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Persimmon warns about housing market as future sales slump
Credit: © Reuters.

By Peter Nurse - Persimmon (LON: PSN ) reported Thursday a strong full-year performance, but the U.K. homebuilder warned about the outlook for 2023 as its forward sales slumped by more than a third.

The company, headquartered in York, England, completed the sale of 14,868 new homes, towards the top end of previous guidance, while the private average selling price increased by around 5% to £272,200. 

This helped its stock price climb over 5%.

However, this good news is likely to be relatively short-lived as Group Chief Executive Dean Finch warned "in the second half of the year, rising interest and mortgage rates, inflation and weaker consumer confidence began to impact customer behavior across the housing market."

Demand fell particularly sharply in the areas where the government's 'Help to Buy' scheme was more widely used once it closed for new applications in England from the end of October, Persimmon said.

Persimmon's current forward sales position fell to £1 billion in 2022, a drop of just over a third from the previous year as concerns over the economy, mortgage rates, and the cost of living weighed heavily on consumer confidence.

The company has responded, launching a "10 months mortgage free" customer offer, which it said generated a strong increase in website inquiries in its first week, but added it was too early to predict when there will be a recovery in demand.

(£1 = $1.2177)

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