Persimmon Statement Echoes Glenigan’s Qualified Optimism

On Monday Persimmon announced preliminary results for 2011. Their analysis shows the same qualified optimism evident in Glenigan’s own forecasts.

In terms of homes planned, Glenigan's figures rank Persimmon as the third most active house builder after submitting 82 detailed planning applications of 10 or more units during the twelve months to September 2011.

It was a significant indicator for market performance, then, that the firm was reporting a recovery in sales driven by higher demand. In particular first time buyers, encouraged by the Government’s FirstBuy scheme, have bolstered an expected 50% increase in profits for last year.

In addition, Persimmon reported strong forward sales of £615 million - up 9% on the previous year. However, the average selling price of £164,000 was 2% lower than the previous year.

In December, Glenigan picked the private housing sector as one which may benefit from a robust recovery from this year’s relatively low base, despite the economic challenges to be faced by the UK this year. As such, a 20% increase in the underlying value of starts was predicted for 2012. As Allan Wilen, Glenigan’s Economic Director, commented in Monday’s Telegraph “Housebuilders [will] look to capitalise on firmer consumer confidence and housing market activity during the second half of the year and during 2013”.

This sentiment is echoed by Persimmon. In Monday’s trading statement put it, “Whilst the general economic backdrop to the UK housing market remains challenging we have experienced encouraging levels of visitors, resilient sales reservations, low cancellation rates and stable prices.”

The group reported they have opened 25 sites in the last quarter of the year and expect a further 60 developments over the next six months. It bought 7,000 plots of land in the second half of the year, bringing the number in its landbank to 63,500, up 8% on the previous year.