UK housebuilders to shed light on property market amid Government targets
Some of the UK’s biggest housebuilders will say whether demand is picking up in the property market after a prolonged slump, as the Government prepares to overhaul planning rules.
London-listed construction groups Persimmon, Vistry and Taylor Wimpey will all provide trading updates next week.
Persimmon, which will give an update on its fourth-quarter trading on Tuesday, recently said buyer demand had picked since the first cut in interest rates in the summer.
In November, the York-based homebuilder said it was on track to complete the sale of about 10,500 homes over 2024, which would be more than the 9,922 recorded in 2023.
Improved customer sentiment was fuelling demand for new homes, thanks to borrowing costs coming down leading to improved affordability among buyers, it said.
Aarin Chiekrie, an equity analyst for Hargreaves Lansdown, said Persimmon has “faced its fair share of struggles over recent years”, with the volume of sales falling more sharply than the broader sector.
“But early signs of promise are emerging in some forward-looking metrics,” he said.
“And while sales rates and price increases are modest, they’ve bucked the sector’s declining trend of late.”
Mr Chiekrie said investors will be looking for an update on build cost inflation, which has started to tick up again recently, putting more pressure on construction firms.
Persimmon also flagged that it would be affected by higher national insurance contributions from April, which it was seeking to mitigate.
Rival UK homebuilder Taylor Wimpey also cheered a stronger performance when it last updated investors in November, saying it was on track to complete the sale of between 9,500 and 10,000 homes, which was at the “upper end” of its previous guidance.
The FTSE 100-listed firm will give its latest trading update on Thursday.
Taylor Wimpey also said it welcomed the “Government’s focus on addressing the UK’s housing supply and and unlocking the planning system” which it expected to positively affect the supply of land.
The Labour Government has pledged to build 1.5 million homes by the end of this Parliament, and last month announced a shake-up of planning rules that will see mandatory building targets for councils in England.
Mr Chiekrie said the pledge to ease planning red tape would be “favourable to Persimmon given its large land bank and low average selling prices”.
Meanwhile, Vistry issued its third profit warning in three months in December, warning of delays to some deals and house completions into 2025.
It nevertheless had a more optimistic view for this year, in which it says “more attractive options” for deals will become available.
The group builds affordable housing and works with local authorities and housing associations, and has previously said it expects to play an important role in the Government’s plans to build more homes.
Vistry will update investors on its recent financial performance on Wednesday.
By Anna Wise, PA Business Reporter