This week brought a measure of optimism in the property sector. One of the UK’s biggest housebuilders has reported that its first-half profits for 2016 are up, adding that customer interest since 1 July has been ‘robust with strong visitor numbers’ despite the uncertainty surrounding Brexit.
Persimmon Homes, the nation’s biggest housebuilder by volume, recently published its half-year results for the six months ended 30 June 2016. The report states that the company’s profits before tax increased by 29% on the same period in 2015, with a 12% increase in turnover and an average increase in selling price of 6%.
Persimmon also owns the more upmarket brand Charles Church, which outperformed the rest of the company with an average increase in selling price of 16%. This was attributed to ‘the continuing focus on delivering higher value new homes in premium locations’.
The report also referenced the challenges presented by the result of the EU referendum, noting that increased uncertainty with the economy was ‘likely to remain for some time’, but emphasising that ‘the Group is in a very strong position to take advantage of market opportunities as events unfold’. The prompt action taken by the government to limit political uncertainty was seen as ‘helpful’, while thanks to adjustments by the Bank of England which saw interest rates slashed from 0.5% to 0.25%, the cost of mortgage lending was described as ‘compelling’.
In the chairman’s statement that accompanied the report, chairman Nicholas Wrigley expanded upon the perceived impact of Brexit:
‘Whilst the result of the EU Referendum has created increased uncertainty, the news was quickly digested by our customers. Customer interest since then has been robust with a strengthening of visitor numbers to our sites compared to the same period last year, visitors per site per week being c. 20% ahead year on year. After a modest increase in the week following the referendum result, cancellations have returned to normal levels and are currently running slightly lower than the same period last year.’
This optimism was echoed by group chief executive Jeff Fairburn, who said: ‘Our private sale reservation rate since 1 July is currently 17% ahead of the same period last year. The Group is now trading through the traditionally slower summer weeks but customer demand remains encouraging and we anticipate a good autumn sales season.’
Some commentators, however, remain cautious despite what appear to be promising figures from a key national housebuilder. A BBC News article quoted Lucian Cook, head of residential research at Savills, who observed that: ‘The key question, of course, is what happens next, because there are some lead indicators, most notably from the Royal Institution of Chartered Surveyors, which suggest that the market may well slow.’
This is not the first time York-based Persimmon has made the news this year. The company saw criticism earlier on in the year over a very lucrative management bonus scheme, with some shareholders claiming that the £600m due to be shared out among the management was much too high.
It remains to be seen whether housebuilders like Persimmon can maintain profit levels like these in a post-Brexit Britain, but with increases in both site visitors and private sale reservations since July, the signs for the property market could be encouraging.