THAT housebuilder Persimmon has delivered a solid set of half-year results shows clear signs that confidence is returning to the housing market.

The York-based company, one of the UK’s largest housebuilders, in a trading statement for the half year ending June 30, 2024, made a point of attributing its performance to an uplift in consumer confidence which has led to a strong pick-up in enquiries over the summer.

The recent cut to the Bank of England base rate further supports this, the builder noted. And while planning is devolved to Scotland, Persimmon has also voiced optimism following planning reforms announced by the new UK Government after Labour’s victory in last month’s General Election.

Housebuilder Persimmon reports improved performance

Persimmon, sitting on a private forward order book up 28% year on year to £1.12 billion, said half-year revenue rose 10.9% to £1.3bn, driven by 4,445 new home completions, up 5%, including a 14% increase in private completions to 3,742 homes with the averaging selling price £263,288, up from £256,445 a year ago.

Underlying operating profit was broadly flat at £152 million, reflecting the slightly lower margins on prior orders due to build-cost inflation and increased use of incentives, while pre-tax profit fell by 3% to £146.3m, although this was ahead of the expected £129m. Persimmon also noted it was on track for completions of about 10,500 for the full year, at the top end of previous guidance.

However, the picture of another housebuilder, Cala, isn’t quite so rosy. It saw profits plunge as it unveiled a £42m operating profit in the six months to June 30 compared with £68m in the same period of last year.

Persimmon shows market challenges are far from over

Of course, Cala is a different animal, owned by Legal & General which has raised the prospect of selling the business under new chief executive Antonio Simões’s plan to simplify the group and increase returns to shareholders.

That said, analysts are particularly upbeat about Persimmon. AJ Bell investment director Russ Mould said: “News leading housebuilder Persimmon delivered completions at the top end of its previous guidance will be music to the ears of a new Labour government which has prioritised increasing the supply of new homes.

“But, while Persimmon did specifically reference recently loosened planning laws alongside its first-half results, the big driver is ultimately signs of improved demand – with the Bank of England’s first rate cut representing a significant moment.”

Cala hit by higher interest rates and planning delays

At Wealth Club, Charlie Huggins, manager of the quality shares portfolio, alluded to “green shoots”, noting: “There are signs that confidence is returning to the housing market. Interest rates have finally started to be cut, mortgage rates are coming down and a landslide labour victory provides further fuel for optimism, particularly given their pro-housing agenda.”

And Persimmon group chief executive made his views crystal clear: “Persimmon is a growing company with growing opportunities.”