Yahoo Finance FTSE 100: Persimmon share price falls as delays and shortages hit building
Shares in Persimmon (PSN.L) dropped after it reported it delivered a lower than expected number of homes in the first half as planning delays, labour shortages and supply chain issues hit building.
The FTSE 100 (^FTSE) homebuilder was the second biggest faller on London's bluechip index, with shares tanking as much as 5.7% on Wednesday morning.
Britain’s biggest housebuilder announced that it completed 6,652 houses in the first half of 2022, slightly below forecast, down from 7,406 in the first half of 2021.
Revenues fell by 8.2% to £1.69bn from £1.84bn during the period. However despite this, Persimmon expects profits for the first half to be "modestly above" its expectations.
"As we rebuild our outlet position, delays in the planning system, disruption in material supply chains and challenges in securing labour have impacted completions in the period," said CEO Dean Finch.
"We anticipate, however, profit at the half year to be modestly above our expectations reflecting strong demand and positive pricing conditions."
Read more: UK house price climb to record £294,845 as markets shows no signs of cooling
Analysts have said "the end of the stamp duty holiday, the wind down of the Help to Buy scheme, supply chain blockages and the cladding issue have all weighed heavily" on the property market.
Richard Hunter, head of markets at interactive investor, commented “In different times, the current state of the housebuilding sector would be the cause of some celebration, with Persimmon being one of the more favoured plays.
"Despite the unquestionable progress, the sector remains deeply out of favour with a gaping disconnect between actual trading performance and share price performance.
"For the longer term, the UK still has a housing shortage, mortgage availability remains high and relatively cheap by historical standards and there are no obvious signs from any of the political parties that the housing market is one with which they wish to tamper."
Read more: Is this the beginning of the end for rising house prices?
It came as Halifax on Thursday said that average property prices rose 1.8% month-on-month in June, marking the biggest monthly rise since early 2007, with the average house price hitting another record high of £294,845.
Laura Hoy, equity analyst at Hargreaves Lansdown, said: "The good news is that demand showed no signs of slowing, with the average house price continuing to climb and a strong forward sales position.
"That should be enough to prop up profits with management guiding for a slight beat at the half year.
"The market wasn’t overly impressed though, likely reflecting worries that this red-hot demand won’t last forever as the cost-of-living crisis continues to grow."
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