Major house-builder brushes off fears of Brexit downturn

Persimmon, one of the UK’s largest house-builders, reported a 29 per cent rise in profits for the first half of the year on Tuesday.

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There were widespread fears that the property sector could suffer real damage as a result of the Brexit vote on June 23 but Jeff Fairburn, Persimmon chief executive, said, “Our private sale reservation rate since July is currently 17 per cent ahead of the same period last year.”Mr Fairburn added, “While the result of the EU referendum has created increased economic uncertainty, customer interest since then has been robust with visitor numbers to our sites around 20 per cent ahead year on year. The group is now trading through the traditionally slower summer weeks but customer demand remains encouraging and we anticipate a good autumn sales season."Chairman Nicholas Wrigley added, "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 reported that pre-tax profits in the six months to the end of June were £352.3 million. Overall completions increased by six per cent to 7,238 in the first six months, while group revenues rose by 12 per cent to £1,489.3 million.Average prices of homes sold under the Persimmon brand rose six per cent to £206,334, while the prices of the group's Charles Church-branded homes rose by 16 per cent to £317,827, reflecting the company's current focus on higher value properties in premium locations.The group pointed to a continued strong jobs market and low mortgage costs as buoying the market, which had seen "healthy demand" for home loans. The company added that the continued shortage of housing supply, as well as Bank of England interest rate cuts and possible action by the government to stimulate the economy, was continuing to boost the market.

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Persimmon said it would continue to buy more land to “support the future development of the business” while "remaining vigilant to any changes in market conditions in the light of the challenges that the country faces”.The York-based company said, "It is 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."Anthony Codling, an analyst at global investment bank Jeffries, said, “UK house-building was a Brexit-free zone in the lead-up to the EU referendum in June and Persimmon’s results imply that it remains a Brexit free-zone after it as well.”Lucian Cook, head of residential research at Savills, 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."Mr Cook said the sector had benefited from government support under the Help to Buy programme, which enables people to buy newly-built homes with deposits of only five per cent and which now supports about a quarter of new sales.Clyde Lewis and Gavin Jago, analysts at stockbrokers Peel Hunt, said in a note that if other house-builders replicate Persimmon’s strong results, then “the government and MPC (Monetary Policy Committee) will increasingly question why any monetary or fiscal stimulus is needed”.