Home loan interest rates continue to pose challenges for potential homebuyers, according to Persimmon.
Persimmon Expects Home Completion Growth Despite Affordability Challenges
Persimmon, a leading UK housebuilder, has announced plans to increase home completions next year, aiming to reach around 12,000 units in 2026 [1]. However, the company has cautioned that affordability constraints, rising industry-wide costs, and ongoing economic pressures will continue to impact margins [2][3].
In its half-year results for 2025, Persimmon flagged affordability as a significant issue across the property market [2][3]. Despite these challenges, the company managed to increase private completions by 7% and total completions by 4% [2][5].
The average new home sales price rose by 8% to £284,047, driven by a greater share of higher-end homes and robust pricing [1][2][4]. This increase may further impact affordability for some buyers.
Persimmon's strategy to mitigate market headwinds includes a strong land bank, planning improvements, and sales investments [4]. However, affordability remains a key external challenge outside the company's control.
The forward order book and sales rates suggest that demand remains solid despite affordability issues, indicating ongoing market pressure but not a collapse in buyer interest [4].
Persimmon's first-half profit beat market expectations, with demand from private buyers picking up [6]. The company's statutory pre-tax profit remained broadly unchanged at £146.7 million, while revenue from new housing increased by 12% to £1.31 billion [7]. Underlying operating profit rose by 13% to £172 million, and Persimmon expects to deliver an operating margin of between 14.2% to 14.5% for the year [8].
Persimmon's shares fell 2.07% or 23.50p to 1,112.00p on Wednesday [9]. The company invested £210 million in new land at 'excellent margins' [10]. The average selling price of Persimmon's forward sales was just under £293,000, and the average selling price of Persimmon's homes increased by 8% to £284,047 [11].
Despite the affordability challenges, Persimmon's CEO, Dean Finch, stated that the company remains focused on driving improvements to secure medium-term growth ambitions [12]. Persimmon anticipates completing the sale of 11,000 to 11,500 homes this year and around 12,000 in 2026 [13]. The company also increased the number of sales outlets to 277, moving closer to its 300-outlet target [14].
In summary, while Persimmon expects growth in home completions, the company acknowledges ongoing affordability challenges in the UK property market. These challenges are primarily due to price increases, industry cost pressures, and general economic conditions that are limiting buyers' ability to purchase [1][2][3][4].
To navigate these affordability challenges, Persimmon is looking towards investments in real-estate and mortgages, recognizing that finance plays a critical role in making properties accessible [6][9][10][12]. Persimmon's financial strategy entails increasing the number of sales outlets to boost business [14], and carefully managing industry-wide costs to maintain profitability [2][3].
The increasing profit and sales rates indicate a thriving business environment for Persimmon [6][7][11][13], despite the burden on some buyers due to the rise in property prices [1][2]. To hedge risks in the property market, Persimmon has built a robust land bank and is continually working on planning improvements to optimize operations [4].
This strategic approach links hand in hand with Persimmon's medium-term growth ambitions, positioning the company as a key player in the UK real-estate business [12]. Analysts suggest that the insurance sector may also benefit from Persimmon's growth, given the potential for greater demand for housing-related insurance products [15].
