Persimmon to slash building of new homes with UK housing crisis set to deepen amid higher mortgage rates and the cost of living crunch
Britain’s housing crisis looks set to deepen after one of the country’s biggest builders said it is slashing the number of homes it will make.
Persimmon said if headwinds continue – including higher mortgage rates and the cost of living crunch – it will build as few as 8,000 homes this year.
That would be a 46 per cent dip from the 14,868 homes the FTSE 100 giant made last year.
Slowing sales: Persimmon said if headwinds continue – including higher mortgage rates and the cost of living crunch – it will build as few as 8,000 homes this year
It said the rate at which it was selling homes slowed sharply in the last three months of 2022.
That followed Liz Truss and Kwasi Kwarteng’s disastrous ‘mini-Budget’, which led to turmoil on financial markets and saw banks hike lending rates and pull some mortgage deals.
And while it is ‘too early’ to tell how the year will go, Persimmon boss Dean Finch said affordability and mortgage availability were ‘key challenges’.
The warning came as data showed prices falling at the sharpest rate in a decade, with £16,000 wiped off the average value in just six months.
Nationwide said prices fell 1.1 per cent in the year to February, the biggest dip since 2012.
And this week the Home Builders Association warned the supply of new houses will fall to its lowest level since the Second World War – from 233,000 last year to below 120,000 in the coming years – well below the Government’s 300,000 per year target.
Labour leader Sir Keir Starmer accused Prime Minister Rishi Sunak of ‘letting a generation down’ by failing to increase the number of new homes being built.
Persimmon’s update followed a warning from Barratt, which said the market faced a ‘marked slowdown’. In January it reported a fall in sales.
Persimmon shares tumbled 12 per cent yesterday. Barratt was off 4.2 per cent, Taylor Wimpey down 4.1 per cent and Berkeley 2.1 per cent lower.
Persimmon slashed its dividend by three-quarters to 60p a share, or £200million, and Finch said the market ‘remains uncertain’. Recent sales falls mean margin and profits will fall, he added.
The average home Persimmon sold last year cost £248,616, a 5 per cent increase from 2021. Revenue rose to £3.8billion, from £3.6billion.
But profit fell from £967million in 2021 to £731million.
