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Brexit Impact on Property Market “Too Early To Judge” Say Housebuilders

Housebuilder Persimmon has reported a boost in the number of sales made in the first half of 2016 despite concerns in the housing sector following the Brexit vote.

Since the result of the EU referendum was announced, recent trading updates have been largely positive despite shares in the housebuilding sector initially plummeting with losses of up to 30%.

 

Standing at odds with the uncertainty and pessimism that followed a fall in share prices, the UK’s largest housebuilders Persimmon reported positive activity for the first six months of 2016 and currently see signs of healthy activity in the market.

 

Between January and the end of June, the FTSE 100 company reported 7,238 completed house sales, generating a £1.49 billion in revenue – a 12% annual rise.

 

Throughout this time, they reported an increase of 6% in average selling prices of homes, rising from £194,378 in 2015 to £205,500 in 2016.

 

The company, which builds residential properties with a primary focus outside of London, attributes the increase in sales to low borrowing costs, a healthy labour market, and an 18% increase in mortgage approvals.

 

Despite Persimmon seeing its shares fall 5% in early trading and its stock dropping 34.5% due to Brexit fears, they maintain a positive outlook for the future of the property market.

 

Persimmon’s chief executive Jeff Fairnburn said: "From our perspective [the environment for house builders] looks pretty good. The market is taking something different from it."

 

"Trading has continued well since the referendum, and the early signs have been positive. We have seen good interest levels – the sales rate has held up and people are still wanting to buy."

 

Fairburn believes that these healthy signs are reflective of the fundamentals that govern the UK’s property market: “Low interest rates and a large supply-demand imbalance will continue to be supportive of the house building sector”, he explained.

 

However, until the housing activity becomes clearer as the events following the referendum unfold, the stock market is said to fluctuate further.

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