Persimmon (PSN) unveiled a further decline in sales during the third quarter, as it continues efforts to improve build quality and the accuracy of move-in times.
The housebuilder reported a 6 per cent decline in the volume of legal completions since July, as it delayed the release of new homes in higher demand areas. That also meant active sites were 5 per cent lower than the same time last year, while an additional £15m has been spent on improving customer care. The weekly average private sales rate per site was flat on the prior year at 0.67 and forward sales of £950m were 4 per cent behind.
The additional investment seems to be paying off, after the group was awarded four star status level in the latest quarterly Home Builders Federation (HBF) customer satisfaction survey. Persimmon had previously been awarded the lowest score of all major house builders in the HBF new homes survey at three out of five stars.
However, higher spending and build cost inflation combined with anaemic house price growth has eaten into new housing operating margins, which declined to 31 per cent during the first-half, from 31.8 per cent during the latter half of 2018.
However, the decline in completions is not representative of market demand because Persimmon have deliberately held-back house sales, said Goodbody analyst David O’Brien.
“[If] demand comes off, is really when margins will be at proper risk of erosion,” he said. “We can already seen signs of build cost inflation easing up somewhat in the UK,” he added.
Yet Mr O’Brien said he had a “cautious outlook” on house pricing over the next year, forecasting between 1 and 1.5 per cent growth in 2019 and flat to 1 per cent increase in 2020.
