Persimmon’s average weekly net private sales rate rose 3% to 0.76 over the first four months of the year. Total buyer incentives continued to run at around 4-5%.
The order book rose 5% to £2.5bn. Within that, private average selling prices were also up 5% to around £306,900.
Persimmon said that the ongoing Middle East conflict has not yet had any “material impact” on trading so far. However, there are early signs of increased inflation in its supply chains which are expected to impact the second half.
Full-year guidance was reiterated, with the group expecting to build between 12,000-12,500 new homes. The group’s comfortable with market expectations for full-year underlying pre-tax profits, which point to growth of around 4% to £462mn.
The shares rose 2.5% in early trading.
Our view
Persimmon delivered a resilient performance in the early months of 2026. Sales rates, average selling prices, and the order book were all trending higher, which saw markets react positively on the day.
More broadly, performance has improved after a tough period a couple of years ago, and revenue trends have been encouraging over the past 24 months. Since Persimmon’s houses are typically priced around 19% below the newbuild national average, sales tend to be more resilient in times of uncertainty.
In line with the broader sector, Persimmon’s valuation has come under pressure in recent months. While the conflict in the Middle East hasn’t had a material impact on Persimmon so far, there’s the potential for that to change in the future. There are already early signs of increased inflation feeding into its supply chains due to higher energy costs, which are likely to hit Persimmon in the second half of 2026 onwards.
The group’s in-house materials businesses, which we see as a key differentiator, should at least offer some relief on that front. They give Persimmon better cost visibility, as well as quicker and cheaper access to key materials than many of its peers. When Persimmon can use its own bricks, tiles, and timber, it saves around £5,000 per plot.
Longer term, significant pent-up demand for homes in the UK remains unchanged. The government’s reforming the national planning framework to help remove some of the roadblocks for builders, and it’s started to have a positive impact. And given the group’s low average selling prices and first-time-buyer bias, it would also be well-placed to benefit from any potential government support for homebuyers.
2026 guidance looks achievable in our eyes, but relies on the current conflict in Iran being fairly short-lived. The situation has already increased the chance of interest rate hikes this year. A more prolonged conflict would pose a risk to buyer affordability and could lead to the growth outlook being scaled back.
The balance sheet remains in decent shape, but building safety charges and peak levels of capital expenditure could see the group slip into a small net debt position this year. We’re not overly concerned for now, and expect cash flows to improve again next year. There’s currently a prospective dividend yield of 6.3% on offer, but as always, shareholder returns aren’t guaranteed.
The recent decline in sentiment toward housebuilders means Persimmon’s valuation is trading well below its long-run average, which looks relatively undemanding. While it remains one of our preferred names in the sector, rate hikes and broader economic headwinds mean it could be a while before the sector ramps back up to full flow.
Environmental, social and governance (ESG) risk
Most housebuilders are relatively low risk in terms of ESG, particularly for those in Europe. However, there are some environmental risks to consider, from direct emissions to the impact of their buildings on the local ecology. The quality and safety of their buildings is also a key risk.
According to Sustainalytics, Persimmon’s management of ESG risk is strong.
The group collects and discloses scope 1, 2, and 3 emissions and has strong emission reduction plans in place. It has also committed to its homes being net zero carbon in use by 2030. However, there’s currently limited disclosure on what percentage of materials are recycled. Disclosures around product and service safety is also lacking.
Persimmon key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.