Business

Persimmon remains confident despite Brexit uncertainty

Persimmon sale signs Image copyright Getty Images

Housebuilder Persimmon has said it is too early to judge the effect of Brexit vote on the housing market as it reported strong trading in the first half of the year.

The firm said the number of completions rose 6% to 7,238 in the period, and it was "confident" about its prospects.

Group revenues rose 12% to £1.49bn.

Persimmon's share price has dropped by almost a third since the UK's vote to leave the EU, in line with falls across the rest of the property sector.

In a statement, Persimmon said it expected the market would continue to provide "good opportunities" for companies that could navigate changes in trading conditions.

"We remain confident in the group's prospects based upon our long-term strategy... the group's excellent forward orders, strong land bank and robust financial position."

'Cautious approach'

Shares in housebuilders and property companies have fallen sharply since the referendum vote, because of fears the UK economy will weaken and reduce the demand for housing.

The sector saw further share price falls on Tuesday, with Persimmon shares down 5%.

Also on Tuesday, St Modwen Properties, which specialises in regenerating brownfield and urban sites, warned about more difficult trading conditions.

The company's chief executive, Bill Oliver, said: "Following the referendum held on June 23, we are now operating in a period of uncertainty in relation to many factors that impact the property market.

"Whilst it is too early to accurately predict how the UK property market will respond, until we have more clarity we believe it is appropriate to take a more cautious approach to the delivery of our development strategy."

The comments came as St Modwen reported half-year profits of £30m. That was down from £206m a year earlier, when its profits had been buoyed by a £128m rise in the value of the development at its New Covent Garden Market site in Nine Elms, London, where it is in a joint venture with Vinci Construction.

The Nine Elms area on the South Bank is currently a major regeneration area, and includes the redevelopment of Battersea Power station, with developers planning to build thousands of new homes.

However, St Modwen has now cut £21m off the value of the site following a 3.75% fall in residential sales prices in the area.

St Modwen's shares fell 8% to 238p in morning trading.

Property funds

On Monday, Standard Life Investments suspended trading in its UK property fund blaming "exceptional market circumstances" following the referendum result.

The fund manager said the number of investors asking to withdraw their money had increased following the vote and it was forced to take action to protect the interests of all investors in the fund.

In the immediate aftermath of the EU referendum vote, a number of big property funds also cut the estimated value of their holdings.

Henderson Global Investors and Aberdeen Asset Management reduced the value of their UK property funds by 4% and 5% respectively.

Image copyright Getty Images

Also on Monday a survey indicated the construction industry suffered its worst performance for seven years last month.

The Markit/CIPS construction purchasing managers' index fell to 46.0 in June, its lowest level since June 2009. A figure below 50 indicates contraction.

Most of the data for the survey was collected before the 23 June referendum in which the UK voted to leave the EU.

Markit said the sharp contraction was driven by a "steep decline" in house building and the first fall in commercial construction work since May 2013.

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