York-based Persimmon says its forward sales have dropped by more than a third as customers delay major homebuying decisions due to the cost-of-living crisis.
The housebuilding giant also warned that the weaker economy would harm the outlook for 2023.
The warning came in a trading update on Thursday, which also highlighted how the company is trying to boost sales with a ten-month ‘mortgage free’ holiday to customers.
Over 2022, Persimmon reported new home completions of 14,868 new homes, up 2% on the 14,551 delivered in 2021, and at the top end of expectations. The average selling price was £248,600, up 5% on 2021.
Persimmon reported that its build rate for 2022 tracked 8% above 2021 levels, with 8,200 homes delivered in the second half of 2022, 15% up on the second half of 2021.
However, current forward sales have dopped from £1.6bn in 2021 to £1bn last year, with them hardest hit in the South.
The uncertainty in the UK housing market has led Persimmon to renegotiate or pause the start of 30 housing sites.
Group chief executive Dean Finch says the company has delivered a strong performance despite headwinds from supply constraints and then the economy.
Higher inflation, rising interest and mortgage rates and lower consumer confidence impacted sales.
Coupled with the absence of Help to Buy, some first-time buyers will have seen see their monthly mortgage payments double over the past year.
Mr Finch continued: “However, with high quality land holdings, a strong balance sheet and an experienced management team, Persimmon is well placed to navigate this challenging short-term backdrop, whilst continuing to take advantage of any opportunities that may arise.
“The longer-term demand for new homes remains strong. We have made significant progress over the past two years in augmenting the Group’s longstanding commercial excellence with renewed operational capabilities building a stronger, more sustainable business for the future.
Persimmon will announce its 2022 Final Results on March 1.
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