Persimmon has warned that the Middle East conflict could dent consumer sentiment amid fears that interest rates could stay higher for longer if inflation soars.
The housebuilder said it was ‘monitoring the impact the conflict with Iran could have on our markets in 2026.’
While oil prices have come down from a high of $120 a barrel on Monday, they remain over 25 per cent higher than at the start of the conflict. It is fuelling concerns that inflation could jump higher and push the Bank of England to hold rates, with some traders factoring in a raise by the end of the year.
Mortgage lenders have started to increase their rates in anticipation, but Persimmon said it had ‘not assumed mortgage rate reductions or the introduction of any government demand stimulus.’
It said ‘the most important short-term factor [is] any changes to customer sentiment in response to increased uncertainty.’
Assuming the conflict is short, Persimmon said it expects to deliver between 12,000 and 12,500 completions this year, with underlying operating profit towards the upper end of forecasts.
The housebuilder’s caution came after a solid set of annual results, in which pre-tax profits rose 11 per cent to £397million. It came after a 12 per cent increase in new home completions, from 10,664 to 11,905.
Persimmon said it was keeping a close eye on the impact of war in the Middle East on ‘customer sentiment’
Persimmon saw total revenue of £3.75billion for the year, up 17 per cent from the previous year.
The group said it delivered 2,075 new homes to housing associations, up 31 per cent on the previous year, with ‘particularly strong’ delivery in the fourth quarter.
Average selling prices rose 4 per cent to £278,203, against £268,499 the previous year. The group’s underlying operating margin increased to 14.3 per cent, up from 14.1 per cent.
Persimmon shares rose 10.34 per cent or 126.50p to 1,350.00p on Tuesday, having fallen nearly 6 per cent in the past month. On Monday, the firm’s share price fell by 5 per cent.
Chief executive Dean Finch said last year’s performance reflected ‘sustained investment in the business and our commitment to self-help, enabling us to grow in a challenging market.
‘Sales in the opening weeks of the year have been strong and the build-to-rent market is recovering from the slowdown around November’s Budget.’
He added: ‘The UK’s housing need is well documented, and the Government is committed to an ambitious housebuilding target. Persimmon is positively engaged with Government, and we welcome the beneficial changes to the planning environment that the Government has introduced, which should improve over time.’
Persimmon has defied the gloom seen elsewhere in the housebuilding sector, which is struggling with margin declines and with profitability below 10 per cent.
Richard Hunter, head of markets at Interactive Investor, said: ‘Uncertainty leading up to the November Budget, mortgage availability and affordability concerns, slowing construction activity and pressures arising from increases to the likes of National Insurance and stamp duty are meaningful headwinds.
But, he added: ‘For many investors a sustained recovery for the group is a matter of when and not if, and alongside an undemanding valuation, Persimmon remains the preferred play in the sector with the market consensus coming in at a strong buy.’
The group’s dividend was held at 60p per share and no share buyback was announced.
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