Persimmon maintains housing growth despite rising costs

Persimmon expects to complete approximately 12,500 homes in 2026, up from 11,905 last year, after reporting stronger private sales and planning approvals despite continued pressure on construction costs and buyer affordability.

The latest trading figures from Persimmon cover the period from 1 July to 1 November 2026. Net private sales increased to 0.79 per outlet per week, compared with 0.76 during the corresponding period last year, while the rate excluding bulk sales rose from 0.63 to 0.65.

Private forward sales increased 3% to £2.15 billion, against £2.09 billion a year earlier. Total forward sales, including partnership housing, rose 1% to £2.82 billion, reflecting different movements across the company’s private and affordable housing activities.

The figures include legal completions since 1 July, rather than representing only homes awaiting completion at the reporting date. This distinction affects how the order book should be interpreted because the totals combine completed transactions during the reporting period with the remaining forward sales position.

In volume terms, the private component increased from 7,084 to 7,122 homes, while partnership housing declined from 4,355 to 4,118 homes. Total forward sales volumes consequently fell by approximately 2%, from 11,439 to 11,240 properties, despite the increase in their combined financial value.

The divergence reflects changes in the mix and selling prices of the homes recorded within the order book. Persimmon’s average private selling price increased to approximately £301,900, compared with £295,150 at the equivalent point in 2025.

Customer incentives continued at around 5% on average, consistent with the first half of the year. Their use indicates that commercial support remains part of the company’s sales arrangements despite the improvement in reservation rates.

Persimmon reports that 77% of its expected open market private completions for 2026 have already been exchanged or completed, matching the equivalent position last year. The group also states that 77% of its planned Build to Rent delivery for the year is exchanged.

These commitments support the company’s confidence in achieving its full-year completion target, although the remaining programme still depends on the progress of construction and the completion of outstanding sales.

Housing delivery involves several connected stages, from acquiring and obtaining permission for development land through to infrastructure construction, individual building plots, and the completion of homes. Delays in one stage can affect the availability of work for subsequent trades and the timing at which completed properties become available for sale.

Persimmon’s planning performance has strengthened during 2026. The company secured detailed or reserved matters approval for 8,722 plots in the nine months to 30 September, compared with 7,753 during the equivalent period last year, an increase of 12%.

Those approvals add to the pool of sites that can progress towards construction, but they do not automatically establish a start date. Individual developments may still require the discharge of planning conditions, technical design, infrastructure preparation, and commercial decisions before substantial building work can begin.

Planning progress is particularly important where the delivery of new housing is constrained by the number of outlets available for development. A housebuilder needs sufficient consented land to replace sites reaching completion while maintaining activity across different local markets.

Persimmon opened 57 outlets during the year to the reporting date and expects approximately 100 openings during 2026. Its average number of active sales outlets between July and November was 263, compared with 272 in the equivalent period last year.

The lower average outlet count has therefore coincided with a higher private sales rate per outlet. The group expects growth in its net outlet numbers by the end of the year and has identified a pipeline of more than 100 outlets due to open during 2027.

Outlet expansion can support greater construction activity, although the rate at which additional sites generate completed homes depends on the timing of mobilisation, the progress of infrastructure works, and the capacity of individual development programmes.

Land investment continued during the third quarter, with expenditure of £107 million, compared with £127 million a year earlier. Total land expenditure for 2026 reached £378 million by the end of September, against £336 million during the corresponding period of 2025.

Despite that investment, the company’s owned and controlled land holdings stood at approximately 81,300 plots at 30 September, down from around 83,800 a year earlier. The figure includes land at different stages of the development process and should not be interpreted as an equivalent number of immediately buildable plots.

Planning approvals, land acquisitions, and site openings each provide different measures of the company’s future development capacity. Their relationship determines how effectively the business can replace completed developments and maintain construction volumes as individual projects progress through their programmes.

Construction cost inflation remains a constraint on that growth. Persimmon reported increased cost pressures during 2026 and expects additional inflationary effects to increase expenditure by approximately £30 million to £40 million during 2027.

The estimate was established in August and reaffirmed in the latest trading statement. It concerns anticipated additional costs next year, rather than expenditure already incurred during 2026.

Higher financing costs are also expected to restrict near-term profit progression. Persimmon has identified continuing affordability constraints and uncertainty over building costs associated with the conflict in the Middle East among the conditions affecting its outlook.

Changes in energy and material costs can influence the prices charged by construction suppliers, while labour availability, subcontractor capacity, and site operating requirements affect the expenditure involved in completing individual homes. The extent of the impact depends on purchasing arrangements, construction specifications, and the stage at which costs are incurred.

Persimmon has identified operating efficiencies intended to substantially offset the additional pressures by 2028. The group is also continuing to develop its vertically integrated operations, which provide greater direct control over selected building products and elements of the housing supply chain.

Vertical integration can influence manufacturing capacity, product specification, and the scheduling of materials supplied to developments. However, internally manufactured components remain exposed to raw material, energy, transport, and production costs, so the arrangement does not eliminate wider construction inflation.

The company expects its 2026 performance to remain in line with market forecasts, assuming no further material deterioration in trading conditions. Company-compiled consensus at 4 November indicated approximately 12,472 completions and underlying profit before tax of £455.7 million.

Those figures are analyst expectations rather than completed financial results. Persimmon’s own delivery guidance remains approximately 12,500 homes for the year, with the final outcome dependent on construction and sales activity during the remaining weeks.

The proposed government-backed Your First Home scheme may provide an additional source of demand in future. Approximately 35% of Persimmon’s private sales during 2026 to date have been to first-time buyers, although the scheme has not formally launched and its effect on 2027 sales remains uncertain.

Persimmon expects further housing volume growth next year, supported by planning approvals, its land pipeline, and the expansion of its outlet network. Increased construction costs and financing pressures could nevertheless restrict the contribution of that growth to near-term profitability.

The company is scheduled to issue its full-year trading update on 12 January 2027, when it will provide completed delivery figures for 2026 and a further assessment of its development pipeline and market conditions entering the new year.