Housebuilder says firm will be hit with 5% build rise this year

Persimmon said it expects build costs to rise 5% this year, adding that it was being “frustrated” by continuing planning delays in a trading update this morning.

The £3.3bn turnover housebuilder, issuing an update for the period from July to yesterday, said private reservation rates were 16% above the level seen prior to the pandemic in 2019, a figure which nonetheless puts reservations well down on the same period in 2020.

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The firm said reservations were down on 2020 levels

While Persimmon’s trading update didn’t provide a direct comparison to the 2020 reservation rate, the equivalent update in 2020 said trading was 38% above 2019 levels.

However, the 13,575 homes a year builder said demand for homes remained healthy, with the market having taken the changes to the government’s Help to Buy scheme “in its stride” and that it still expected to sell around 10% more homes this calendar year than in 2020.

Persimmon’s statement said trading was now “following a more normal seasonal pattern than the heavily pandemic disrupted year of 2020”.

It said it was managing build cost inflation through utilising its various offsite facilities, including the Space4 timber frame business. It said it expected margins to remain “resilient” which would “accommodate[e] the expected increase in our build cost inflation this year of c5%”.

The firm said it was continuing to bring forward new land into the business “despite the well-documented planning delays suffered by the industry”, which it described as “frustrating”.

The UK’s number three housebuilder by volume added it was on course to top pre-pandemic build levels next year.