Persimmon saw property sale completions plummet by 42% between January and March, according to a trading update issued yesterday.
The group completed sales on 1,136 properties during the first quarter of the year, down from 1,950 at the corresponding point last year.
However, the housebuilder did see private average selling price on completions rise 10% in Q1 2023, compared to the same period in 2022.
In the trading update, Dean Finch, group chief executive, said Persimmon responded quickly to the deterioration in market conditions in the second half of last year, by restricting costs and managing build programmes to conserve cash.
He said that this has seen build rates in the first quarter fall 30% year-on-year to 176 units per week (Q1 2022: 252 units per week).
He added that profit margins would be significantly impacted by lower completions and build cost inflation tracking at 8%-9% outstripping a modest increase in average selling price.
He commented: “While the outlook remains uncertain, we are encouraged by the level of visitors to our sites and the normalisation of cancellation rates, which resulted in a steady improvement in sales rates across the period which has continued in early April.”
“These early signs of increasing customer confidence are particularly evident in demand for our three, four and five bed homes.
“While interest remains good for all our homes, sales to first-time buyers remain more challenging, reflecting stretched affordability and reduced mortgage availability at higher loan-to values, particularly in regions with higher house prices.”
He added: “If sales rates continue at the levels seen year to date, we would expect full year 2023 volumes to be toward the top end of the previously indicated range of 8,000 to 9,000 completions.”
Looking beyond 2023, Persimmon has a strong platform from which to grow outlets and volumes as the market recovers, according to Finch.
He added: “We have an excellent pipeline of new land opportunities to support growth in 2024, subject to planning, and we are encouraged by the early signs of improved customer confidence.”
