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Persimmon: market conditions are expected to "remain subdued"

ended 12. March 2024

Persimmon has just issued its full year results, which can be seen >> here <<. The builder 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.” It added: “The longer-term fundamentals for the housing market remain positive.”

Regarding demand, 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.”

Newspage asked brokers and property experts for their views, below.

6 responses from the Newspage community

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Samuel Mather-HolgateVerified
Independent Financial Adviser at Mather and Murray Financial
It’s a little ironic that Persimmon recognise that customers want affordable housing in great locations, exactly what they are not delivering. Some of this blame can be dumped on the house builder, but a lot remains at the door of the government. Stagnation in the construction sector has got worse, as ministers are terrified of tackling it. Persimmon results will be best of the bunch, but as an investor you’ve done terribly over the past three years. A new government, however, could be a new dawn.
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Stephen PerkinsVerified
Managing Director at Yellow Brick Mortgages
When Persimmon talk about the housing market, they are actually only talking about the new homes market. New homes will continue to struggle with the loss of the Help to Buy scheme, and gimmicks like the Own New scheme simply won’t replicate Help to Buy’s success. It will likely be a flat year for developers but the overall housing market should improve as the year progresses with falling inflation and base rate cuts on the horizon.
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Graham CoxVerified
Director at Bridging Hub
Persimmon's profits plummeted by over 50% last year. Sales, unsurprisingly, slumped in the face of cost of living pressures and 14 successive base rate increases. Persimmon paints a rosy outlook, citing pent-up demand for new builds, but in a high interest rate environment, that demand will only return if properties become more affordable.
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Justin MoyVerified
Managing Director at EHF Mortgages
Its interesting to see how developers such as Persimmon deal with the end of Help to Buy, and see how 'normal' sales volumes hold, especially in the very subdued 2023 market. Even without higher mortgage rates, the real cost of new build properties was very much under scruitiny anyway. With the impact of expensive mortgages for some time to come, the move to build more smaller, cheaper properties, especially for first-time buyers, must become a key strategy for Persimmon to survive the next 12-18 months. We don't need more 6-bedroom mansions at the moment. Demand is strong for homes, but we must build more affordable homes to meet that demand.
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Akhil Mair0
Director at Our Mortgage Broker
Based on this latest set of results from Persimmon, the UK housing market landscape appears bleak. Despite some improvements in affordability driven by wage growth and mortgage market changes, challenges persist for first-time buyers, especially in southern and eastern regions. With stagnant interest rates and the uncertainty of an impending general election, the outlook for 2024 remains subdued. However, amidst the gloom, hope flickers in the longer-term fundamentals, offering a glimmer of optimism amid the uncertainty.
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Gary Bush0
Financial Adviser at MortgageShop.com
The latest Persimmon Homes full-year results and trading statement reads that yet another builder hasn't read the tea leaves in their cup and started a full rethink of the way that they do business. The UK has been going through a terrible five years and yet these corporates haven't read the mood music and are still churning out overpriced and poor value, in the medium-term, properties. Strangled household budgets mean new home prices need to adjust to the actual market value and not still soar well above relative homes in the local vicinity of the build. Having relied on the Sugar Daddy money of the government in Help to Buy hasn't helped these firms truly take a look at their offerings and realise that the high-price new build game is up and they need to adjust to offer a truly low-cost housing range and with ancillary facilities, such as GP surgeries, Post Offices and Schools.