Top building firms expect solid returns
BRITAIN’S property market will be in sharp focus this week as two of the biggest housebuilders post annual figures after a solid year for the sector, despite a Brexit vote blip.
Attentions are turning to the prospects for 2017 as experts forecast house price growth will ease back, while builders are facing soaring costs from the weak pound.
Charles Church owner Persimmon is first out of the stalls with its results today, and is expected to report profits jumping by nearly a fifth during 2016 thanks to a surge in sales over the final six months.
Buyer demand and house prices have been surprisingly resilient since the EU referendum, thanks largely to rockbottom borrowing costs after the Bank of England halved interest rates to 0.25 per cent in August.
Analysts expect Persimmon to post a 19 per cent hike in pre-tax profits to £756million. This will mark a slowdown on the 34 per cent profits growth notched up in 2015, but Persimmon hailed a strong performance over the second half of 2016 in the face of uncertainty caused by the Brexit vote in June.
It legally completed the sale of 15,171 homes in 2016 – up four per cent – while group revenues lifted eight per cent to £3.14billion. Legal completions rose 9.6 per cent to 7,933 in the second half, while its private sales rate was 15 per cent higher year on year.
Robust results from Taylor Wimpey, which reports tomorrow, are also expected after the group said in January profits were expected at the upper end of market forecasts. Taylor said home completions rose four per cent in 2016, but it was the eyecatching 11 per cent rise in average selling prices to £255,000 that stood out.
Jefferies analysts are pencilling in a 21 per cent leap in pre-tax profits to £728.3million.
They said: “The group is unfazed by the uncertainty in the wider economy and remains on track to meet its three-year targets.”
The City will be watching outlook comments closely, though, after recent property sector reports have suggested price rises are slowing.
The Halifax index showed house prices dipped for the first time in five months in January – down 0.9 per cent month on month.
Experts predicted last year that growth would be more modest in 2017 as consumers come under pressure from surging inflation, but the UK’s chronic housing shortage will likely mean any slowdown is short-lived.