(Bloomberg) -- Persimmon Plc warned that build costs have started to increase and are likely to rise further following the UK budget.
The homebuilder is starting to see signs of cost inflation emerging in price negotiations for 2025, according to a statement Wednesday. Persimmon said it expects costs to be also pushed higher by new building regulations and employer national insurance increases announced in last week’s budget.
“We are seeking to mitigate the impact of these cost increases through robust commercial controls and other management actions,” the company said in the statement.
The housing market has endured two years of stubbornly high interest rates that sapped demand from first time-buyers, a group which account for a large share of Persimmon’s customers. Still, optimism had started to increase after home loan costs tipped lower in recent months and amid political promises to boost housebuilding.
The average number of homes sold at Persimmon’s sites per week rose to 0.70 between July 1 and Nov. 3, compared with 0.51 in roughly the same period a year earlier. Persimmon said it expected about 10,500 home completions in 2024, compared to 9,922 in 2023.
Persimmon said the average selling price in its private forward sales rose to £291,400 ($374,930), up 10% from an average of £266,100 at the end of 2023. It said its forward order book is up 17% on the prior year.
“We remain optimistic about our growth prospects although the quantum and timing of future interest rate changes is uncertain and we continue to assess the implications of the recent budget,” the company said in the statement.
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