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Persimmon recover swiftly from pandemic

House sales 11% above pre-COVID-19 levels says Persimmon

Persimmon (LON:PSM) said on Wednesday that its house sales during 2021 are 11% higher than before the coronavirus pandemic took hold in a sign of continued strength for the UK housing market.

Forward sales for the quarter are worth £3bn, according to the FTSE 100 homebuilder, up 23% on a year ago, when lockdowns started, in comparison to £2.7bn in 2019.

Persimmon also said that the average price of a house built is rising, up to £252,000, from £244,500 a year before.

Dean Finch, chief executive, said it had been a strong start to the year with build rates at pre-COVID-19 levels and first-half volumes approaching those of 2019.

Persimmon was also buying land, he added, with 6,000 plots across 29 locations acquired this year.

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Commenting on the trading update, Steve Clayton, Hargreaves and Lansdown Select fund manager said:

“Persimmon’s current run-rate of sales suggests the full-year outlook could be significantly better than previous expectations. That explains the bounce in the shares in early trading, up 2% to 3210p. The market was expecting the group to match 2019’s outcome this year, but rather than simply recovering, the group looks to have moved straight onto outright growth, if it can maintain momentum in the business.”

“There are challenges ahead. Stamp Duty is coming back, and can Persimmon actually maintain production at the levels currently demanded? Persimmon’s earlier caution means it faces pressure to lift the rate of new site openings. Adding 6,000 new land plots in the quarter is a good start here, but buying land is not the same as building on it. The group are taking a cautious approach, suggesting that build rates will only match the 2019 level for the rest of the year, so analysts will be wary of pushing forecasts too far forwards at this stage. But with over £900m of cash in the bank, Persimmon faces its challenges from a position of huge strength.”

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