Pent-up demand, the government’s measures to support the housing market and a “chronic undersupply” of homes have driven a 23% leap in sales for the UK housebuilder Persimmon this year.
The country’s second biggest builder said it had completed £3bn worth of sales since the start of the year, almost a quarter ahead of the same period in 2020 and 11% up on the start of 2019.
Revenues are booming thanks to a rise in the average selling price to private owner-occupiers from £244,500 last year to £252,000, as well as an increase in the order book.
Analysts said the shortage of housing, combined with taxpayer-funded support for new buyers, was driving up the price of new homes and contributing to the profits of Persimmon and other homebuilders.
Since the first lockdown ended, the housing market has been lifted by a series of government measures, including a stamp duty holiday and the recent launch of a guarantee scheme for 95% mortgages.
The help-to-buy loan scheme, which supports purchases of new-build homes, has been restricted to first-time buyers since April but is still being used by the major builders to encourage sales.
In its trading update, Persimmon said customer inquiry levels “remained encouraging” throughout the period, and forward sales were strong.
The group’s chief executive, Dean Finch, said persimmon was on track to increase the number of new homes handed over to customers compared with last year.
He added: “Whilst recognising the cautious optimism being generated by the vaccine rollout programme, employment levels and consumer confidence will be influenced by unfolding events and the UK’s future economic progress.
“As demonstrated by Persimmon’s performance through the disruption of last year, the group remains particularly well placed to manage market conditions as they develop. The long-term fundamentals surrounding the new home market remain positive and the board is confident of the group’s future success.”
Ben Nuttall, a senior analyst at Third Bridge, said UK housebuilders had benefited from government policies that had boosted demand.
He said: “Pent-up demand for housing is also coming through on the back of consumers accumulating lockdown savings and being subject to fewer outgoings. The UK’s demand-side policies are great for helping individuals, couples and families get on the housing ladder. However, according to our experts, whilst a chronic undersupply of UK housing persists, demand-side policies mostly serve to drive up prices, benefiting housebuilders like Persimmon.”
The builder said it had taken advantage of “good-quality selective land investment opportunities”, with a net spend of £140m so far this year, bringing in 6,000 plots in 29 locations across the UK.
Anthony Codling, a housing market analyst and CEO of the property website twindig, said Persimmon’s continued investment in land suggested “that the current health of the housing market will remain for some time”.
Codling added: “Persimmon appears to be addressing the concerns of stakeholders whilst delivering strong results for shareholders, delivering the fabled ‘win-win’.”