Persimmon - The housing plot thickens
Persimmon revealed a continuing strong sales performance in the third quarter, covering the months following the EU referendum. The group are now fully sold up for the current year, with forward sales beyond 2016 of £757m, up 4% on last year.
The shares were up slightly following the announcement.
Nicholas Hyett, Equity Analyst at Hargreaves Lansdown:
"Recent data on the housing market has been confused to say the least, with banks continuing to report slowing rates of mortgage approvals and stalling house prices, while housebuilders say sales and interest both remain strong.
Help to Buy might provide some explanation because the government scheme was designed to encourage building, so offers such as the equity loan only apply to new build houses. That could be supporting demand in the new-build sector in which housebuilders operate – providing the industry with a cushion the rest of the housing market lacks.
Nonetheless, Persimmon looks to have been preparing for tougher times ahead. The group expects increased cash balances at the year end, and is reducing investments in new land. More cash in the bank and a more cautious approach to investment suggest the group is laying foundations to weather a coming storm."
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