© Reuters.
Jeffrey Smith
Investing.com — persimmon (LON:) UK-based homebuilder expects fewer homes to be built this year and profits per house lower as highest interest rates in more than a decade beat housing market Shares plunged Wednesday after the announcement.
“The sales rate we’ve seen in the last five months means that this year’s completions will drop significantly, resulting in lower margins and profits,” Persimmon said in 2022.
Due to the continuing high level of uncertainty, we were unable to provide firm guidance. However, Morgan Stanley analysts said the latest information indicates that pre-tax profit is likely to fall by more than half this year to around £300 million (£1 = $1.2075). rice field.
Following the news, persimmon shares fell more than 10% by 04:15 ET (09:15 GMT), hitting a seven-week low. The update also sent other stocks in the sector lower. barratt development (LON:) down 3.4%, and Taylor Wimpy (Ron:), Crest Nicholson (LON:), and Bellway (LON:) All are down 2% or more.
The update is the latest in a string of grim news from the sharply declining UK housing market since the start of a rate hike cycle that has significantly exacerbated the UK’s longstanding problems with housing affordability.
UK house prices fell at their fastest pace since 2012 in January, falling 0.5% and 1.1% from a day earlier, according to figures released Wednesday by mortgage lender Nationwide.
Persimmon completed 14,868 homes last year, up 2% year-on-year, but had to spend a lot of money revising last year’s substandard work, especially in terms of demolition, resulting in a net profit of 25%. decreased by nearly 100% to £731m. of potentially hazardous coverage from the building. Underlying operating profit increased by 4% to £1.01 billion.
The group said it will scale back its land purchases this year and implement various cost-cutting measures to bolster profitability in anticipation of further weakening in selling prices.
There was additional evidence of pressure on the housing market Wednesday from the realtor sector as Purplebricks (LON:) said it would consider bidding for the company as part of its ongoing strategic review.