One UK home builder believes the housing market has steadied, following some deal cancellations.
UK home builder Persimmon on Tuesday (5 July) said the country’s housing market has steadied following some deal cancellations immediately after Britain decided to leave the European Union, reported Reuters.
While it is still too early to judge the effect of the June 23 ‘Brexit’ vote, Persimmon’s Chief Executive Jeff Fairburn said his firm’s focus on lower priced deals involving first-time movers and buyers makes it well placed to cope with any turbulence.
“There is some uncertainty among people about what’s happened and that’s natural, but we’ve not seen that translate to any significant change in our trading,” he said.
The Brexit vote saw the market value of Britain’s top developers, including Berkeley, Taylor Wimpey, Barratt and Persimmon, drop by a total of £8 billion.
Although the stocks have witnessed some recovery, they are still trading below pre-referendum levels, with market confidence rattled by multiple analyst downgrades of the sector, the first suspension of a UK property fund since 2008, and government warnings of a potential drop in home prices.
Persimmon shares were down 4.6 percent at 1,369 pence earlier this week, even as the firm posted a 12 percent increase in first-half revenue.
With this, Hargreaves Lansdown analyst Laith Khalaf expects investors to “push the sell button first, and ask questions later”.
Last week, retirement home builder McCarthy & Stone said uncertain market conditions may affect its ability to meet the full-year sales target, while London-focused estate agent Foxtons expects earnings to fall.
Persimmon, on the other hand, is in a good position to withstand any turmoil given its robust land bank and forward orders of £1.36 billion as at 30 June, analysts said.
The firm also has a further £5.50 per share to return to investors under its previously announced scheme, which Fairburn assured remains on track.
When asked what the firm will do should Brexit lead to a recession as warned by some economists, Fairburn said it could cease acquiring land and conserve cash instead.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
