Persimmon has become the latest business to confirm that consumer confidence held up ahead of the UK general election, despite concerns that the closeness of the opinion polls - erroneous as it turned out - would cool demand for housing.
The company, one of Britain’s biggest housebuilders, said volumes rose by 7% in the six months to the end of June and total revenues rose 12% to £1.34bn. It said:
Customer sentiment remained resilient through the period running up to the general election on 7 May and confidence has improved subsequently.
Demand has been supported by an increasingly competitive mortgage market over the last six months, together with continued growth in employment and some welcome improvement in disposable incomes.
But Persimmon shares have edged 3p lower to £20.13 on profit taking after a good run and on a Nationwide survey showing - in slightly contracdictory fashion to the company’s view - that house prices dipped 0.2% in June.
Clyde Lewis at Peel Hunt issued a hold note on the business, saying:
A pick up in consumer confidence post election, continued growth in the active number of sites, further expansion in the land bank and a strong net cash position were the key highlights. We see modest upgrades post this update and, while the shares don’t look cheap on a price/net asset value versus return on equity basis, our higher expectations of the capital return/dividend yield will continue to support the shares.
Liberum said:
Persimmon’s trading update shows that volumes are accelerating, even if inflation is not. This is a positive development but the shares have performed strongly and valuation is now stretched. We expect more subdued performance in the shares from now, even if catalysts for a reversal are hard to spot.
