Persimmon profits up amid 'robust' demand

Housebuilder Persimmon has reported a 29% jump in first-half profits and said customer interest since the Brexit vote has been "robust".

Pre-tax profits in the six months to the end of June were £352.3m.

The company said its private sale reservation rate since 1 July was 17% higher than at the same time last year.

The result of the EU referendum had increased economic uncertainty, it added, but since then, visitors to its sites were up 20% year on year.

In the first six months of the year the number of visitors to the company's sites had been 8% ahead of same time in 2015.

"The group is now trading through the traditionally slower summer weeks but customer demand remains encouraging and we anticipate a good autumn sales season," said group chief executive Jeff Fairburn.

In the immediate aftermath of the EU referendum share prices in property companies plummeted amid expectations that there would be a decline in demand for property.

However, shares jumped again after the Bank of England cut interest rates to 0.25% from 0.5%.

Persimmon chairman Nicholas Wrigley said: "After a modest increase in the week following the referendum result, cancellations have returned to normal levels and are currently running slightly lower than the same period last year."

Persimmon, which is the biggest UK housebuilder by volume, said average selling prices had increased for both its brands.

Persimmon branded properties rose by 6% to an average of £206,334, while Charles Church homes rose by 16% to £317,827. The company said the increase in the average value for Charles Church properties was a reflection of its focus on higher value properties in premium locations.

It sold 1,122 new homes to housing associations in the first six months of the year, compared with 1,100 in 2015.

The firm said overall completions increased 6% to 7,238 in the six month period, while group revenues rose by 12% to £1,489.3m.

The head of residential research at Savills, Lucian Cook, said the backdrop to Persimmon's results was that before the EU referendum, major housebuilders were well capitalised and transaction levels were very strong.

"Those housebuilders have been able to benefit from schemes such as Help to Buy which, since its inception, has accounted for something like or in excess of one in four private home sales," he added.

"The key question, of course, is what happens next, because there are some lead indicators, most notably from the Royal Institution of Chartered Surveyors, which suggest that the market may well slow."

Persimmon said it would "remain cautious" about investing in new land.

It said it was "likely that uncertainty around the potential impact of the EU referendum result on the UK economy will persist for some time".

"In this environment, we will remain cautious with respect to new land investment, but will continue to proceed with attractive opportunities on a selective basis."

Shares in Persimmon were one of the best performers on the FTSE 100 on Tuesday.