Housebuilder Persimmon cautions over ‘highly uncertain’ 2024 as election looms
The York-based nationwide builder said property market conditions were likely to remain uncertain this year despite mortgage rates starting to ease.
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Your support makes all the difference.Housebuilder Persimmon said it sold a third fewer homes last year, but surpassed its own expectations as demand picked up towards the end of 2023.
The York-based nationwide builder said property market conditions were likely to remain uncertain this year despite mortgage rates starting to ease.
The company reported 9,922 new home completions over 2023, down 33% from 14,868 in 2022.
Nevertheless, it came in ahead of previous guidance of 9,500 finalised sales for the year.
Persimmon said it saw a “sustained” rise in interest in its homes throughout the year from the lows hit during the final quarter of 2022, in the fallout of the Government’s mini-budget which sent mortgage rates soaring in the lead up to Christmas.
But demand remained lower than previous years thanks to higher interest rates which have driven up the cost of borrowing.
The removal of the Government’s Help to Buy scheme also contributed to lower demand among first-time buyers, Persimmon said.
The housebuilder said its average selling price for a private property increased by about 5% to £285,770, up from £272,206 the previous year, reflecting the mix of developments and type of houses it put up for sale.
It comes as mortgage rates have been falling in recent months, with large lenders such as Barclays and Santander announcing cuts to their available rates this week.
Persimmon’s chief executive Dean Finch said the firm “performed well in challenging market conditions”, with sales rates “relatively robust” over the year.
“We have successfully balanced our need to control costs, whilst investing in the business to position it for sustainable growth when conditions improve,” he said.
The upcoming UK general election could cause a few wobbles in the market if buyers and sellers sit on the sidelines waiting to see which rabbits are pulled out of the hat by the winning political party before committing to a transaction
Nevertheless, the company said it expects conditions in the property market to remain “highly uncertain” during 2024, particularly for first-time buyers and as a general election looms in the UK.
Property experts have suggested housing market activity can slow ahead of an election while voters wait for the outcome and to see which policies are outlined.
Russ Mould, investment director for AJ Bell, said: “Persimmon is right to be cautious about the outlook, saying that market conditions will remain highly uncertain this year.
“No-one knows with certainty how the Bank of England will act with interest rate policy.
“Furthermore, the upcoming UK general election could cause a few wobbles in the market if buyers and sellers sit on the sidelines waiting to see which rabbits are pulled out of the hat by the winning political party before committing to a transaction.”
But he added there are “tentative signs” that hopes of borrowing costs coming down is encouraging more people to think about buying a home.