Persimmon Outpaces: British homebuilder Persimmon is on track to exceed its 2023 homebuilding target, buoyed by improved sales since the start of October. However, the company remains cautious about market conditions in 2024 due to uncertainties stemming from mortgage rates and living costs that are discouraging potential buyers.
The news of Persimmon’s positive sales outlook contrasts with some of its peers, including Barratt and Vistry, which recently reported challenges in the British housing market. These announcements have created some uncertainty in the sector, making Persimmon’s performance more notable.
In addition to the company’s optimistic sales figures, there is some relief in the housing industry as mortgage lender Halifax reported that British house prices stopped their six-month consecutive decline in October.
The Bank of England’s decision to maintain interest rates at a 15-year high of 5.25% for the second consecutive meeting has provided further stability in the housing market. However, it has not entirely alleviated the challenges, as high mortgage rates have limited sales throughout the year, leading many builders to issue profit warnings. These difficulties have occurred amid ongoing concerns about stubborn inflation in the UK economy.
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Persimmon noted that while overall pricing remained relatively stable, private average selling prices in its order book had seen a slight decrease. Build cost inflation had also proven to be more persistent than initially anticipated at the beginning of the year.
The company highlighted an improvement in the private sales rate over the last five weeks, which rose to 0.59 units, up from 0.45 homes during the same period the previous year. As part of its earlier recruitment freeze, Persimmon anticipates a reduction of around 700 employees in 2023.
The firm, headquartered in York, northern England, now expects to build 9,500 homes in 2023, surpassing its August forecast of 9,000 units. Its annual operating profit is anticipated to align with market expectations, indicating a roughly two-thirds decrease from the previous year.
Analysts from Investec noted that the improved sales rates observed since October may have been influenced by increased marketing efforts and additional selling incentives. The housing market in the UK remains an evolving landscape, with various factors influencing its performance and future prospects.
Our Reader’s Queries
Why are persimmons not sold in stores?
The Japanese persimmon tree produces a unique fruit that can be enjoyed in different ways. When firm and non-astringent, it can be eaten like an apple. However, when soft-ripe, the fruit is cut in half and the pulp is scooped out with a spoon. Although persimmons are not commonly found in stores, they are worth seeking out. This is because they are very soft when ripe and too astringent to eat when not ripe.
How wide does a persimmon tree get?
The Diospyros Virginiana, also known as the American Persimmon, boasts impressive dimensions. This tree can reach towering heights of 60-80 feet and span widths of 35-50 feet. Its size is truly a sight to behold.
Why aren t persimmons more popular?
The persimmon tree’s slow growth is one of the reasons why it’s a unique fruit. It can take up to eight years for the tree to bloom for the first time, and another three years before it starts producing fruit. Interestingly, the persimmon tree doesn’t have the classic fall foliage that we often associate with other trees.
Where is the best place to plant a persimmon tree?
Persimmons are a hardy fruit that can thrive in a variety of soil types, including heavy clay and dry soils. Once established, these trees are drought-tolerant and require well-draining soil to avoid root rot, fungus, and other soil-borne diseases. For optimal growth, persimmon trees prefer loamy soil with a slightly acidic pH.