Persimmon annual profits are expected to hit higher end of market forecasts
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Housebuilder Persimmon has announced that its annual profits are expected to hit the higher end of market forecasts, despite concerns over the impact of potential interest rate changes on buyer confidence. The Charles Church group's shares surged by 5% in Tuesday morning trading following news that private market house prices had seen a slight increase over the year, with average selling prices rising to around £287,150 from £285,774 previously, and completions also growing by 7% to 10,664.
The company anticipates full-year underlying pre-tax profits to be near the upper end of the £349m to £390m range analysts have predicted. Chief executive Dean Finch expressed optimism about the improved market conditions, highlighting that "customer enquiries and sales rates have been consistently ahead of the prior year since the spring selling season".
However, the FTSE 100 firm voiced concerns regarding the future of interest rates and their potential effect on the housing market and consumer confidence. "We are mindful of evolving macroeconomic and geopolitical uncertainties, including the timing of future interest rate changes, and the effect that they may have on our market and consumer confidence in the short term," the company stated.
With economists expecting further cuts to interest rates, the uncertainty remains due to rising UK inflation and the anticipated trade tariffs from incoming US President Donald Trump. Additionally, recent disturbances in the UK government bond markets, fuelled by concerns over public sector debt levels and slowing growth, are likely to exert more pressure on mortgage rates.
