Investment Case

The UK housing market

Housing Supply

Market trends

There is a chronic undersupply of housing, compounded by population growth and the need for replacement of existing housing stock. The Government’s target of delivering 300,000 homes annually in England is not being met which is adding to the housing crisis. There is a need for high-quality homes across all tenures, not just private homes for sale. Development drives community benefits, economic activity and aligns with the broader pursuit of net zero emissions as new homes become more energy efficient.

However, the industry has struggled to meet housing targets, leading to price inflation in some areas and exacerbating supply-demand imbalances. In 2023, economic uncertainty, affordability challenges, and the end of schemes like Help to Buy further impacted delivery rates. There remains near-term uncertainty, driven by factors such as an expected general election in 2024, which further complicates the landscape. Moreover, the planning environment and limited land supply pose significant barriers to development and home delivery

Our response

We remain committed to delivering high-quality homes, evidenced by the delivery of our highest-ever quality homes in 2023. Delivery of homes in 2023 was impacted by the challenging market backdrop. However, as the market recovers, with a substantial portfolio of plots under our control, we are well positioned to expand our outlet network and return to volume growth to help the industry meet housing demand.

Additionally, we engage proactively with policymakers to address planning constraints and advocate for measures that support sustainable development.

Overall, our response emphasises resilience, innovation, and collaboration to drive sustainable growth and address the pressing needs of the UK housing market.


Government ambition for new home additions in England

Mortgage availability and affordability

Market trends

The housing market has faced challenges since 2022, with higher mortgage rates impacting affordability. Although UK base rates have peaked, there’s ongoing uncertainty about the extent of interest rate cuts in 2024. Swap rates, though reducing from peak levels, have experienced volatility, and their trend will be crucial for restoring confidence in the housing market.

House prices in December 2023 saw a 1.8% decline compared to the previous year, marking a 4.5% decrease from the all-time high recorded in late summer 20221. At the end of 2023, the average two-year mortgage fix was 5.93%, significantly higher than the 2.38% average two years earlier2. Despite these fluctuations, with stability in the Bank of England base rate and the average mortgage rates falling, the backdrop is improving for buyers.

This was evidenced with a recent uptick in mortgage approvals, rising from 49.3k in November to 50.5k in December 20233. While mortgage approvals are rising, they remain notably below a ‘normal’ level with the first-time buyer market particularly constrained

Our response

Persimmon provides diverse house types at attractive prices, enabling customers to purchase at a price they can afford. Our private average selling price of £285,774 is over 20% below the national average4 and reflects our commitment to accessible housing.

We continue to adapt our strategies to mitigate economic uncertainties and affordability issues. This includes optimising sales approaches and exploring solutions such as shared ownership products.



lower private ASP than national average4

The Farriers 9

Skilled labour and materials

Market trends

The UK construction industry faces labour shortages due to an ageing workforce, post-Brexit immigration restrictions, skills gaps, and negative industry perceptions. These factors limit the availability of skilled workers, hindering productivity and exacerbating challenges in meeting demand for construction projects.

Throughout the first half of the year, the UK construction market faced significant build cost inflation which started to ease in the second half of the year. Overall build cost inflation was c.8–9% in 2023. The softening of build cost inflation towards the end of 2023 will benefit completions from 2024.


apprentices within the business


supply chain jobs supported

Our response

In response to the shortage of supply challenges in the industry, we leverage a robust supply chain and leverage group agreements to mitigate material costs. During the year we proactively approached suppliers to renegotiate prices as market conditions softened.

In addition, our vertically integrated manufacturing facilities continue to support delivery and efficiency across the business. Brickworks, Tileworks and Space4 all performed well in 2023, aligning output with the lower completions in the year and operating with a low level of fixed costs.

To address the labour shortage, our proactive approach involves recruiting and training numerous apprentices and trainees, complemented by a comprehensive graduate recruitment programme. Collaborative efforts with schools, colleges, and subcontractors further support apprentice recruitment, ensuring a resilient response to industry challenges.

Planning and regulation

Market trends

The UK planning system is facing a number of challenges. It is a lengthy and complicated process which has been made more challenging with uncertainty around local housing plans and changes to the National Planning Policy Framework (‘NPPF’) following the passing of the ‘Levelling Up Bill’ which removed the requirement for local authorities to have a local housing target or maintain a five-year land supply.

Planning permissions are currently being granted at record lows with around 60 local authorities having paused or withdrawn their local plans. In addition, the Home Builders Federation estimates that around 185,000 homes are on hold due to Natural England’s mitigation measures on nutrient neutrality, water neutrality and Recreational Impact Zones.

Amendments to Part L regulations which include a c.30% enhancement in the efficiency of new homes came into effect for all developments in June 2023. The proposed Future Homes Standard (‘FHS’), expected in 2025, requires an approximately 80% efficiency improvement compared with regulations as at June 2022. Biodiversity net gain legislation came into force in February 2024 which requires a 10% minimum net gain on all developments.

Our response

The Group is supportive of the objectives to enhance home quality and actively engages in reducing carbon usage in the industry. The Group is trialling various low carbon building techniques and participates in the Low Carbon Homes Steering Group.

Despite a more challenging planning environment, Persimmon’s sharpened approach to planning is bearing fruit, with detailed planning achieved on c.11,000 plots in the period. This involves greater engagement at a local level and ensuring that applications are aligned with needs. This resulted in a halving in the number of planning refusals received in 2023 compared with the previous five-year average.


plots achieved detailed planning in 2023

1. Nationwide House Price Index.
2. Moneyfacts.
3. Bank of England.
4. Based on the Group’s private average selling price of £285,774 for the year to 31 December 2023 compared with the national average selling price for newly built homes sourced from the UK House Price Index as calculated by the Office for National Statistics from data provided by HM Land Registry.

Skilled Labour

Five Year Summary

Our figures for the period 2017-2022, updated annually.

Five Year Summary


How we performed.

Key Performance Indicators

Our Business Model

How we create sustainable value.

Our Business Model