Help to Buy scheme helps boost Persimmon profits

Wed, 01 Mar 2017

Help to Buy scheme helps boost Persimmon profits
House builder Persimmon has announced its annual pre-tax profit has risen by almost a quarter following an increase in sales, supported by the government's Help to Buy scheme.

The 23 per cent increase in pre-tax profits saw the company gain £783m last year, while its revenue grew 8 per cent to £3.1bn, as Persimmon followed in the footsteps of rivals Redrow and Barratt Developments, who also posted strong rises in pre-tax profits recently.

The company said: "The UK new build housing market remains confident with customer demand for new homes supported by compelling mortgage products," but added it was "wary of the risks and increased uncertainties associated with the EU referendum result."

In 2016, there were 6,970 new homes sold by Persimmon through the Help to Buy scheme, representing 46 per cent of the total number sold. Overall, 15,171 new homes were built by the company, which was 599 more than in 2015. In addition to this, the average selling price increased almost 4 per cent, to £206,765.

"The Brexit-shaped dent in Persimmon's share price has now been almost entirely repaired by brisk trading and resilient performance from the UK economy," said Laith Khalaf, senior analyst at Hargreaves Lansdown.

"The UK's housebuilders have had the wind at their back for some time now, with the government Help to Buy scheme boosting transaction numbers, while a chronic housing shortage has pushed prices up too.

"Looking forward, the UK housing market shows little sign of pausing for breath in its steady upward climb, and low interest rates are likely to remain supportive for the foreseeable future."
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