The Government’s housebuilding drive received a boost of confidence on Tuesday after London-listed builders reported building more new homes than expected last year.
Persimmon and Cairn Homes delivered excellent, forecast-beating results for last year thanks to higher housebuilding volumes.
York-based Persimmon completed construction of 10,664 properties in 2024, an increase of 7 per cent on the previous year and ahead of market forecasts.
The growth was driven by private home completions rising 18 per cent to 9,075, offsetting a 30 per cent drop in associated new homes.
The average sales price of a new home also rose 5 per cent to around £268,500, which Persimmon said partly reflected “improving market conditions”.
The British housebuilding sector has fallen on difficult times for more than two years due to rising interest rates and consumer weakness.
Last year, the Bank of England made fewer cuts to the base rate than initially expected, ultimately reducing it just twice, to 4.75 percent, amid fears of a resurgence of inflation.
Mortgage rates are falling to more affordable levels, although the best rates remain above 4 percent for now.
This has spurred a recovery in residential prices and transactions.
Growth: Persimmon built 10,664 properties in 2024, an increase of 7 percent from the previous year.
As a result, Persimmon’s current forward order book stands at £1.15bn, an increase of 8 per cent year-on-year.
The FTSE 100 group further forecasts its underlying pre-tax profits for 2024 to be at the high end of market expectations.
Dean Finch, CEO of Persimmon, said the company “is well positioned for the future, supported by the land and planning investment we have made over recent years, our vertical integration capabilities and our excellent teams.”
He added: “This investment, together with the Government’s ambitious planning reforms calling for more high-quality, affordable housing which is Persimmon’s core strength, supports our medium-term growth ambitions.”
Cairn also achieved strong growth last year, beating estimates on home starts and operating profits.
The Dublin-focused company reported that its profits soared by almost a third to around €150 million, while its turnover and completed units expanded by 29 percent to €860 million and 2,243 homes respectively.
Over the next year, Cairn plans to expand investment in its construction activities, which it said will “significantly increase” sales in its core market of first-time buyers.
“There remains a limited supply of competitively priced and well-located new homes, and the favorable economic backdrop continues to drive very positive momentum,” he told shareholders.
Meanwhile, housebuilder MJ Gleeson said its expected results for the 2025 financial year will be ahead of the previous 12 months and in line with its current market outlook.
The Sheffield-based group sold 801 properties in the six months to December 2024, 32 more than the same period last year.
However, Crest Nicholson said its adjusted pre-tax profits for the latest financial year would likely still be at the lower end of its guidance range of £22m to £29m.
It has delayed the publication of its 2024 results for a fortnight until February 4 to allow auditors more time to determine the full costs of improving fire safety in its high-rise buildings.
The Surrey-based company now estimates its total fire repair provisions to be between £245m and £255m.
Crest had previously forecast £145 million, but this estimate only covered around 45 per cent of the buildings affected.
Dozens of property developers have agreed to spend billions of pounds this decade on fire safety works on large buildings, including removing unsafe cladding.
Despite predicting additional costs, Crest Nicholson Stock They rose 2.4 per cent to 160.1 pence on Tuesday morning.
MJ Gleeson actions were 4.2 percent higher at 461 pence, while Cairn Homes Stock rose 1 percent to 176.8 pence, and Persimmon Stock they rose 5.6 per cent to £11.15.
Charlie Huggins, head of equities at Wealth Club, said: “With low single-digit cost inflation expected for housebuilders in 2025, they cannot afford to see house prices fall back.”
‘But the chances of that happening have increased since the autumn budget. This leaves the property market in a precarious position as we begin the new year.’
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