Persimmon PLC (LSE:PSN) said it has continued to see healthy demand for its houses in the second half of the year.
The housebuilder expects to complete roughly 10% more new homes this year than it did last.
The company, which has benefited massively from successive governments introducing measures to keep the housing market on the boil, grumbled that the housebuilding industry continues to “face challenges in the UK planning system” but added that it has £1.15bn of forward sales reserved beyond the current calendar year, up from £0.95bn in (pre-COVID) 2019.
Management also flagged up the industry’s supply chain difficulties, which it said it was coping with well; Persimmon continues to expect its industry-leading margins to remain resilient, despite build cost inflation rising by in 2021.
“The market has taken the changes in the Government's Help to Buy scheme and the stamp duty regime in its stride,” Persimmon said.
Customer enquiry levels throughout the second half of the year were described as “encouraging”.
The group's average private sales reservation rate for the period was roughly 16% higher than for 2019.
“With £1.15bn of forward sales reserved beyond the current year and a quality pipeline of new developments coming on stream, Persimmon has a robust platform to support its continued high-quality growth and the delivery of superior long-term sustainable returns for the benefit of all stakeholders,” said Dean Finch, the chief executive of Persimmon.
Steve Clayton, a fund manager at Hargreaves Lansdown, said the trading statement was broadly reassuring but did not “move the dial one way or the other”.
“The group are in Goldilocks territory, with enough stuff going in their direction, house prices in particular, to offset challenges like wage inflation and materials shortages, to leave Persimmon in a very comfortable financial position,” Clayton said.
Keith Bowman, an investment analyst at interactive investor, also described the statement as “reassuring”.
“Average private sales reservations for the period are up 16% on the pre-pandemic 2019, with £1.15 billion of forward sales reserved beyond the current year and cash held of £895 million,” Bowman noted.
“For investors, supply chain challenges are adding to build cost inflation, while UK interest rates are likely to rise as the Bank of England looks to contain inflation. A price to net asset value ratio of 2.5 times is also comfortably above rivals such as Barratts and Taylor Wimpey at under two times, suggesting the shares are not obviously cheap.
“That said, demand for new houses remains robust, and cost inflation is being countered by higher selling prices and prior moves to manufacture its own raw materials. Land buying opportunities are still being found, while recent government changes to curtail house buyer assistance have not hindered the sector. In all, and with the shares sat on an historic and estimated future dividend yield of over 8%, analyst consensus opinion continues to point to a buy,” Bowman said.
Shares in Persimmon were down 0.9% at 2,697p in the first hour of trading.