Higher house prices help Persimmon offset impact of wider inflation as profit falls

Rising selling prices for new homes helped FTSE 100 developer Persimmon offset the impact of wider inflation on its business as profit fell in the first half of its financial year.

The average selling price for a new home built by Persimmon rose by £9,400 year-on-year, to almost £246,000 in the six months to June 30. Profits fell by 8% to £440 million. It said the rate of private sales fell 11% in the first seven weeks of the second half, compared with the previous year, when the end of Covid lockdowns sparked a sales bump.

Persimmon said “sales price inflation” was “currently mitigating the cost inflation the industry is experiencing”, which it said was “around 8% to 10%”.

It also pointed to the outlook for rising mortgage costs as well as the end of government policies to help people get onto the housing ladder, but stood by its profit guidance for the full-year.

“We are mindful of the scope for further interest rate raises as well as the broader economic challenges recently set out by the governor of the Bank of England, alongside the wider industry challenges including the withdrawal of Help to Buy,” said Dean Finch, chief executive.

First-half completions fell due to delays in securing planning permission, although Persimmon stood by its guidance for the year to complete between 14,500 and 15,000 homes for 2022, saying demand remained “strong”, and forward-sales rates at 90%.

Shares in the York-based company fell 0.8% to 1837p on Wednesday.