The Mail on Sunday

Persimmon profit leap calms fears of housing slump

- By ALEX HAWKES

BRITAIN’S biggest housebuild­er will this week calm fears of a post-Brexit housing slowdown – posting a 26 per cent rise in first-half profits.

Analysts at Deutsche Bank expect volume builder Persimmon to reveal interim profits to the end of June of £345 million, up from £273 million for the same period last year.

Persimmon’s views on trading following the EU referendum vote are likely to be closely scrutinise­d, amid fears that the housing market may have dipped significan­tly.

However, analysts at investment bank JP Morgan said they did not anticipate house prices to fall outside London.

In a note to investors, they said: ‘Affordabil­ity outside London remains good, even before factoring in the benefit of low interest rates and last week’s further cut.

‘We therefore see no obvious significan­t risk of deflation UK-wide.’ Persimmon is unlikely to be significan­tly affected because it has few projects in the capital, according to the note. Shares in housebuild­ers have fallen by a quarter since the vote on June 23.

The JP Morgan note said: ‘At this point we believe investors are pricing in about a 5 per cent house price decline UK-wide. However, while we think it’s prudent to assume that transactio­n numbers will fall during 2017 (although trends have been solid so far), we see no warning signs that house prices are likely to decline UK-wide. We are more bearish on London and see scope for double-digit price declines.’

Broker Cannacord said housebuild­ers’ dividend plans were unlikely to change following the referendum vote.

Meanwhile, infrastruc­ture specialist Costain will announce a doubledigi­t rise in profits when it reports half-year numbers on Wednesday.

‘While we expect an infrastruc­ture slowdown in the short term due to political uncertaint­y as a result of Brexit, we believe the need for better UK infrastruc­ture is real,’ said analysts at broker Liberum.

 ??  ?? GROWTH: Housebuild­er’s profits are set to rise in the wake of the EU vote
GROWTH: Housebuild­er’s profits are set to rise in the wake of the EU vote

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