British homebuilder Persimmon raised its 2026 home‑completion forecast to the top of its previously announced range, signalling confidence in its pipeline despite a backdrop of higher building costs and a cooling housing market.
Forecast and Recent Performance
Persimmon now expects to deliver roughly 12,500 homes in 2026, matching the upper limit of its earlier guidance. The company said underlying pre‑tax profit for the year should align with market expectations of about £454 million. For the six months to June 30, underlying pre‑tax profit rose 3% to £170.1 million, while completions increased 13% to 5,189 units. The lift in the delivery target reflects a stronger land position and continued investment in new sites, setting the builder apart from peers such as Taylor Wimpey, Barratt Redrow and Berkeley, which have trimmed their land acquisition plans.
Cost Pressures and Margin Outlook
The builder warned that rising costs could compress margins in 2027. Inflation linked to the Iran conflict has pushed up prices for building materials and energy, creating an estimated impact of between £40 million and £50 million over the next 18 months. It has identified cost‑saving measures that should offset at least half of this hit. In‑house manufacturing capabilities for bricks, roof tiles and timber frames have helped shield the firm from some of the price spikes that have affected rivals.
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Despite the optimistic delivery outlook, buyer enquiries fell in July, and open‑market sales—excluding bulk transactions—dropped below year‑ago levels during the five weeks ending early August. The slowdown mirrors broader trends in the UK housing market, where raised mortgage rates and persistent inflation have dampened demand.
The market remains tight.
Persimmon’s approach to land remains selective. While it continues to add new sites, the firm emphasized that its strong land position allows it to be “even more selective,” a stance that could preserve profitability if market conditions worsen. This contrasts with the broader industry, where many developers are pulling back on land purchases to protect cash flow.
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Updated guidance also reflects confidence in the underlying demand for new homes, despite the recent dip in enquiries. The ability to maintain a robust pipeline may be aided by a diversified product range, which includes both entry‑level and higher‑specification homes, catering to a broader segment of buyers.
Analysts will likely watch margin performance closely in the coming months, as the impact of inflation and geopolitical tensions becomes clearer. If the cost‑saving measures prove sufficient, Persimmon could maintain its profit trajectory despite the challenging environment.
For now, the builder’s raised forecast places it at the forefront of the sector’s expectations for 2026, while the warning about 2027 margins highlights the uncertainty that continues to loom over the UK housing market.
