Persimmon restores dividend as sales tick higher

Housebuilder Persimmon provided more evidence of a resurgent property market today when it revealed a big jump in sales rates since the start of July.

The group said it had made an “excellent” start to the second half of the year, with a 49% year-on-year rise in average weekly private sales rates per site. It added that its forward order book stood at £2.5 billion which is 21% higher than a year ago.

The performance chimes with recent surveys pointing to strong recent housing market activity as pent-up demand is released after the Covid-19 lockdown. Chancellor Rishi Sunak's stamp duty holiday on properties up to £500,000 has also helped.

The impact of the pandemic earlier in the year meant profits in today's interims results slumped 43% to £292.4 million, with the company completing 4,900 homes in the six months to June 30 compared with 7,584 a year earlier.

Persimmon's cautious optimism about the rest of 2020 has allowed it to restore dividend payments, albeit at a “modest” 40p a share. Further dividend payments will be reviewed later this year.

A proposed 125p per share return of surplus capital due to be paid on 2 April was cancelled earlier this year, with an annual final dividend of 110p per share due in July also postponed.

The company did not use the government's furlough scheme during the period it had to close sites. CEO Dave Jenkinson, who leaves the group at the end of this year, said build rates had returned to pre-Covid levels by the end of June.

He added that long-term housing market fundamentals remained strong, although the company is wary about the risks to demand from Covid-19, rising unemployment and Brexit.