Persimmon warns of ‘highly uncertain’ 2024 despite recent rise in demand

Housebuilding giant Persimmon has revealed plunging home completions and cautioned over a “highly uncertain” property market in 2024, despite seeing demand edge up last month.

The Charles Church group reported new home completions down 37% year-on-year at 1,439 in the quarter to November 6 and said it was seeing prices for forward orders of new homes for private sale fall 2% to about £277,750.

It saw average weekly reservations slump to 0.48 from 0.63 a year earlier, but said it had seen a strong pick-up in the past five weeks, to 0.59, thanks to improved trading since the start of October.

The group’s forward sales have increased since the half year, to £1.6 billion from £1.4 billion, although it remains 23% lower year on year.

It comes as recent market indicators also signal a tentative recovery in October, with Halifax’s latest house price index released on Tuesday showing values increased by 1.1% on average month-on-month to £281,974.

This compares with a fall of 0.3% in September.

Nationwide last week reported a 0.9% rise in house prices month-on-month in October, thought to reflect a constrained supply of properties for buyers to choose from on the market.

But Persimmon said it was increasingly resorting to incentives to boost demand – standing at about 3.6% on private sales on average in its third quarter – and gave a very cautious outlook over the year ahead.

Persimmon said: “Into 2024, we anticipate market conditions will remain highly uncertain.”

It added: “On the whole, pricing remains broadly stable although we have seen a slight reduction in group private average selling price in the forward order book and an increase in the use of incentives, particularly in the South where affordability constraints are greater.”

It said it had faced soaring build costs, which is set to end the year at about 8% or 9%, but added that these had “moderated” since the half-year thanks to a “proactive approach with suppliers and subcontractors to secure price reductions on both materials and labour over the past few months”.