Nov 09, 2021

Persimmon and Vistry updates confirm momentum in UK housing

Persimmon
Vistry
Housing
UK
Dominic Ellis
3 min
Persimmon reports £895m net cash at the end of October and Vistry expects full year profit to be slightly ahead of consensus

Trading updates from Persimmon and Vistry Group point to sustained momentum in the UK housing market, despite ongoing supply and cost pressures, the end of the stamp duty holiday and changes to the help to buy scheme.

Persimmon reported demand in H2 to date (July to 8 November) has returned to more normalised patterns and has been robust with private sales per site per week up 16% on 2019. The company expects to complete about 10% more homes this year that last, rising from 13,575 units, to around 15,000.

In support of future growth, Persimmon has brought 16,200 new plots into the business this year which should lift the overall land bank slightly. It has spent about £380m so far (including £160m of deferred creditor payments) with £180m of land spending in H2.

"The fundamentals of the UK housing market remain strong with good levels of consumer demand and confidence, mortgage availability and low interest rates," it said.

The company has £895m of net cash at the end of October with just £30m of deferred land commitments by the year end. Net cash is therefore likely to be somewhat higher by year end as reservations complete ahead of Christmas.

Persimmon remains well placed for 2022. It currently has £1.15bn of forward sales for completion next year, up from £0.95m at the same point last year. 

Dean Finch, Group Chief Executive, said: "While the industry continues to face challenges in the UK planning system, we are successfully bringing new land into construction and growing our already strong UK wide outlet network."

In its update, Vistry Group expects full year profit to be slightly ahead of consensus, at around £345m versus the market consensus of £341m. It has been busy with average private sales per site per week at 0.77 for the year to date, up from 0.76 in H1 which implies a rate of c0.79 in H2 to date.  

It now has 100% of land secured for next year and 81% for 2023, and a similar percentage of land secured in Partnerships. Vistry has also added to its environmental initiatives by setting up a training centre, approved by the Institute of Environmental Management and Assessment.

Greg Fitzgerald, Chief Executive, said: "We continue to see strong demand across all our business areas and working in close partnership with our supply chain, we are actively mitigating any supply chain pressures. As a result, we are firmly on track to deliver a significant improvement in profits this year.

"The outlook is positive, and we are confident we will see a further step up in performance in FY22 as we drive towards achieving our medium term targets. Delivering high quality, sustainable homes and communities, providing excellent customer service and investing in our people are all at the core of how we operate and are key to our ongoing success."

Andy Murphy, Director at Edison Group, said: "Persimmon has faced material and labour inflation in the period, as much as 5%, but has also benefitted from some house price inflation which will support its industry leading margins. Persimmon continues to make progress on raising quality and is tracking a 5-star HBF rating (92%), and is also pursuing carbon reduction targets."  

Vistry’s forward sales position is good with total forward sales of c£3bn, including £1.6bn in housebuilding, £511m in Partnerships and £855m in Partner Delivery.

'"Despite supply chain pressures, Vistry has managed the process such that it expects house price inflation to more than offset the inflationary pressures it has faced," added Murphy.

"It anticipates build cost inflation of c4-5% in the next 12 months with greater pressure on labour and less pressure on materials as strains begin to ease. The company has been active in the land market adding 6,373 plots across 31 sites in the year to its Housebuilding division."

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