Persimmon says new home enquiries have ‘softened slightly’ but the FTSE 100 housebuilder is still seeing higher forward sales
Persimmon is issued a warning over escalating supply costs
Yorkshire housebuilder Persimmon has raised concerns over escalating supply costs linked to the Iran conflict, as demand starts to ease. The firm, one of Britain’s biggest housebuilders, announced it is beginning to encounter inflationary pressures within its supply chain, which it warned could affect its finances as early as the second half of this year.
The Government is relying on housebuilders to deliver its target of 1.5m homes, yet industry figures have cautioned that building material costs could surge as a result of the Iran conflict.
The FTSE 100 company said: “There are early signs of increased inflation in the supply chain, driven by higher energy costs, which are likely to impact the second half of 2026 and into 2027. We are looking to mitigate these where possible through our strong relationships with our suppliers and subcontractors.”, as reported by City AM.
However, the housebuilder confirmed it has yet to witness any “material impact” from the ongoing Middle East conflict. Despite the looming threat of inflation, Persimmon reported that net sales per week are 3% up on last year, with forward-looking sales up by 7% to £1.8bn.
The housebuilder’s share price climbed by more than 2% in early trading, reaching 1,053p, as stockbrokers praised the company’s robustness.
Mark Crouch, analyst at eToro, said: “Persimmon’s update suggests a housing market that, for now, is holding firm, but the bigger picture for UK housebuilders is rapidly darkening. Persimmon’s numbers look solid enough, forward sales up, pricing holding firm, and volumes broadly in line with expectations.”
Property analysts have cautioned that expectations of interest rates remaining elevated for longer owing to the Iran conflict have prompted Britons to delay home purchases, as they await more favourable mortgage rate offers. Persimmon reported that enquiries for new properties have “soften slightly” in recent weeks, though the housebuilder noted that sales have remained “resilient”.
“We continue to be mindful of the potential effects on consumer confidence and affordability, with some increases in mortgage rates seen since early March,” the company stated.
In its full-year update at the close of last year, the housebuilder highlighted a “supportive” economic climate, as the construction and property sectors bounced back from a spell of uncertainty surrounding the Budget. Persimmon recorded an 11% rise in profit, climbing to £397m in the year ending December.
However, sentiment around housebuilders has shifted markedly since the Iran conflict started in February, as demand for house purchases has taken a knock from concerns that interest rates will remain higher for an extended period. Earlier this week, Taylor Wimpey became the latest housebuilder to temper its outlook with a cautious update, warning that construction costs could be poised to increase.
And earler this month, Barratt Redrow – Britain’s biggest housebuilder – announced it would significantly reduce its land acquisition spending, pointing to the need for prudence given the economic fallout from the Iran war. Meanwhile, housebuilder Berkeley saw its share price tumble at the beginning of the month after announcing it would halt land purchases entirely, citing an “unprecedented increase in cost and regulation”.
You must be logged in to post a comment Login