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British homebuilder Persimmon has raised its expected home completions for 2026 to the upper end of its earlier guidance after reporting higher deliveries and improved first-half earnings. Despite the stronger operational performance, the company cautioned that rising construction costs, driven by inflation and higher energy prices linked to the Middle East conflict, could affect profit margins in 2027. While Persimmon has identified cost-saving measures to offset part of the impact, it also reported softer buyer enquiries in July, reflecting continued pressure on the UK housing market amid elevated mortgage rates.
British homebuilder Persimmon has increased its forecast for home completions in 2026 to the upper end of its earlier guidance, while warning that rising construction costs could put pressure on profit margins in 2027. The company said inflationary pressures, supported by higher energy prices linked to the conflict in the Middle East, are expected to increase costs over the coming months.
The UK housing market continues to face challenging conditions as elevated mortgage rates, persistent inflation and weaker buyer affordability weigh on demand. At the same time, builders are dealing with higher prices for construction materials due to rising energy costs.
Persimmon estimated that higher inflation could increase its costs by between GBP 40 million and GBP 50 million over the next 18 months. However, the company said it has already identified cost-saving measures that are expected to offset at least half of this additional financial impact.
The developer stated that its in-house manufacturing operations, which produce bricks, roof tiles and timber frames, have helped reduce its exposure to rising material costs compared with many of its competitors. This vertically integrated manufacturing model has provided greater control over key construction inputs during a period of cost volatility.
Unlike several major UK homebuilders, including Taylor Wimpey, Barratt Redrow and Berkeley, which have reduced their land acquisition targets in response to market conditions, Persimmon has continued investing in new development sites. The company said its strong land portfolio allows it to remain selective while pursuing future growth opportunities.
For the first six months of the year, Persimmon reported an underlying pre-tax profit of GBP 170.1 million, marking a 3% increase compared with the corresponding period last year. Home completions also rose by 13% year-on-year to 5,189 units, reflecting improved construction activity and project deliveries.
Despite the stronger first-half performance, the company indicated that market conditions remained mixed. Buyer enquiries weakened during July, while open market sales, excluding bulk transactions, fell below the levels recorded during the same period last year over the five weeks leading into early August. This suggests that demand remains under pressure despite gradual improvements in supply.
Based on its performance so far, Persimmon now expects to complete around 12,500 homes in 2026, placing deliveries at the upper end of its earlier guidance. The company also said its underlying pre-tax profit for the full year is expected to remain in line with market expectations of around GBP 454 million.
The update comes as UK housebuilders continue to balance construction activity with cautious consumer demand. Several developers have adopted a more measured approach to land investment and new project launches over the past year due to affordability challenges and economic uncertainty. Persimmon's decision to maintain investment in its land pipeline reflects confidence in its long-term development strategy despite near-term market pressures.
Source Reuters
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