Persimmon is kicking off 2017 with some good news, as it reported today that its revenues and sales were up.
And the markets certainly seem to be happy with the housebuilder – the company's share price was up 4.42 per cent at the open.
The housebuilder's trading update has laid some strong foundations for the year ahead. Revenues for 2016 hit £3.14bn, up eight per cent on the year before (when the company achieved £2.9bn).
Sales volumes increased by 599 homes, bringing total sales to 15,171, as compared to 14,572 in 2015 – growth of four per cent. And, those homes sold for more; the average selling price was up four per cent on the year before. The average price for a Persimmon home was £206,700 in 2016.
Why it's interesting
All eyes have been on the housebuilders after the Brexit vote. The industry's stock took a huge hit in the aftermath of the referendum, and has been struggling to regain its previous levels ever since. Persimmon wasn't the worst affected, at least – Berkeley Group was relegated from the FTSE 100.
Many commentators have maintained that the housebuilder sell-off following the referendum was premature, as the dynamics of supply and demand in the housing market still play in the housebuilders' favour. Today's news will have vindicated that view, with Persimmon reporting that prices are up, and demand is still strong.
Anthony Codling, analyst at Jefferies International, said:
We expected a confident trading statement from Persimmon and we got one.
Persimmon is doing its bit in increasing housing supply and we look forward to this month’s White Paper to see how the Government intends to help others do the same.
What Persimmon said
"Buying a new-build home remains a compelling choice supported by competitive mortgage offers which continue to make a new home purchase very affordable," the company said.