Housebuilder Persimmon is sticking with its full year expectations and that suggests it is doing a decent job of managing said expectations.
The first half was truly bleak and understandably so given the removal of the crutch provided by the Help to Buy scheme and as potential purchasers face up to much more expensive borrowing costs.
AJ Bell investment director Russ Mould said: “Given the inflationary pressure on build costs has been in place for some time and shows no sign of disappearing any time soon, a drop in volumes and average selling prices was always likely to leave Persimmon exposed.
“Persimmon’s strategy of retrenchment and adopting a wait and see approach seems a prudent one. The company had already rebased its dividend and keeping a financial buffer to see it through the current turmoil seems sensible. The company is also looking at belt-tightening, putting pressure on contractors and adopting more efficient build processes.
“There are lots of uncertainties for the company right now, including the future direction of rates, whether the supply and demand dynamics in the UK can continue to limit the damage on house prices and what happens to the economy from here.”
