Persimmon is one of the largest housebuilders in the UK. In 2018 we completed 16,449 home sales to customers, 406 more homes than in 2017.
Demand for new homes in the UK remains robust due to demographic trends, the requirement to replace aging housing stock and a long term trend of consistent undersupply of new homes.
Affordability is a key factor influencing housing demand. Increased demand has resulted in house prices rising at a rate above that of retail price inflation. However, given the low mortgage rate backdrop, mortgage cost to income ratios remain below the peak levels seen in 2007. The average UK house price was £230,776* in December 2018, a growth of 5%* on the previous year. Our average selling price was lower than this UK average at £215,563 in 2018, as we have a focus on affordability and the first time buyer, first time mover market. The Government’s Help to Buy scheme has also assisted affordability, particularly for the first time buyer market.
Consumer confidence and the health of the UK economy are fundamental factors that support customer demand and a sustainable UK housing market. GfK’s long running consumer confidence index decreased during 2018 with the economic uncertainty resulting from Brexit negotiations weighing on the outlook for household finances. The latest GfK Index suggests that consumer confidence has remained stable albeit 5 points lower than the same point in 2018. However, market fundamentals remain supportive; unemployment rates remain historically low, interest rates continue at lower levels and mortgage lenders are keen to support customers with competitive mortgage products, resulting in resilient consumer confidence. The UK economy grew by 1.4%* in 2018 per the latest estimates, slightly below 2017 growth rates, albeit broadly in line with forecast**.
Planning approvals for the year to 30 June 2018 were at the highest level since June 2006 however the process of securing implementable detailed planning consent remains challenging. The Government’s Revised National Planning Policy Framework, published in July 2018, aims to make it easier for planners, developers and local councils to deliver good quality housing in places where people want to live, at a faster pace. The Government’s ambition is to achieve 300,000 new homes a year by the mid 2020’s. Local planning authorities are required to put in place five year plans to meet their housing needs which should ensure a consistent supply of consented land to enable the housebuilding industry to commit capital to long term projects.