Persimmon share price falls back as private reservations dip

Shares in Persimmon fell more than 3% in early trading today as it said it expected build costs to rise 5% this year and was being “frustrated” by continuing planning delays.

The £3.3bn turnover builder, issuing a trading update for the period from July to yesterday, said private reservation rates were 16% above the level seen prior to the pandemic in 2019, a figure which nonetheless puts reservation well down on the same period in 2020.

While Persimmon’s trading update didn’t provide a direct comparison to the 2020 reservation rate, in the equivalent update in 2020 it said trading was 38% above 2019 levels, compared to the 16% increase on 2019 recorded this time.

However, the 13,575 homes a year builder said demand for homes remained healthy, with the market having taken the changes to the government’s Help to Buy scheme “in its stride”, and that it still expected to sell around 10% more homes this calendar year than in 2020.

Persimmon’s statement said trading was now “following a more normal seasonal pattern than the heavily pandemic disrupted year of 2020”.

Persimmon said it was managing build cost inflation through utilising its various offsite facilities, including the Space4 timber frame business. It said it expected margins to remain “resilient”, “accommodating the expected increase in our build cost inflation this year of c. 5.0%”.

The firm said it was continuing to bring forward new land into the business “despite the well-documented planning delays suffered by the industry”, which it described as “frustrating”.

The UK’s number three housebuilder by volume said it was on course to top pre-pandemic build levels next year.

The fall in Persimmon shares came despite a general rise in shares on the London Stock Exchange, with the FTSE100 up 0.1%.