Persimmon sees annual profit halve and warns 2024 will ‘not be easy’

The Charles Church builder revealed pre-tax profits slumped to £351.8 million in 2023 from £730.7 million the previous year.

Housebuilder Persimmon said annual profits have more than halved in 2023, and warned 2024 will be another difficult year (Owen Humphreys/PA) (PA Archive)

Housebuilding giant Persimmon has revealed that annual profits have more than halved, and warned 2024 will be another difficult year.

The Charles Church builder saw pre-tax profits slump to £351.8 million in 2023 from £730.7 million the previous year.

New home completions fell by a third to 9,922 from 14,868 in 2022.

The group said the housing market is set to “remain subdued” and “challenging” in 2024, with little sign of a pick-up ahead of a general election and with interest rates still at their highest since the 2008 financial crisis.

Persimmon said it has seen a slight increase in demand at the start of 2024 as mortgage costs have eased back a little, with its weekly net private sales rate per outlet rising to 0.59 from 0.54 a year ago.

But it said it is having to use incentives to boost demand, such as part-exchange deals.

Shares in the group fell 4% in Tuesday morning trading.

With interest rates expected to remain at current levels and a general election on the horizon, market conditions are expected to remain subdued throughout 2024

Persimmon

Persimmon said: “With interest rates expected to remain at current levels and a general election on the horizon, market conditions are expected to remain subdued throughout 2024.”

Chairman Roger Devlin said: “While demand remains high, affordability and mortgage availability has been difficult for many of our customers, especially first-time buyers.

“Thankfully, there has been some stabilisation in recent months with mortgage rates having fallen from their peak in July 2023.

“While 2024 will not be an easy year, I remain very confident of the exciting long-term prospects for the group.”

Private market house prices rose 5% to £285,774 in 2023.

But the group revealed that, on an underlying basis, home sale prices came under pressure as an 8%-9% rise in build costs and the use of incentives offset increases.

Enhanced competition in the mortgage market and wage growth have contributed to improved affordability albeit it continues to be constrained

Persimmon

The group said build costs have eased back to around 3%-5% in 2024.

It is expecting to deliver between 10,000 and 10,500 homes this year, at an average selling price of £280,000 – down 2% on 2023 values.

Persimmon said: “Enhanced competition in the mortgage market and wage growth have contributed to improved affordability albeit it continues to be constrained, particularly for first-time buyers, and demand for homes remains varied across the country.

“Trading in the southern and eastern counties remains more challenging with weaker pricing, offset by a more robust trading performance in the northern regions.”