Housebuilding giant Persimmon has revealed that annual profits have more than halved, and warned 2024 will be another difficult year.
The Charles Church builder saw pre-tax profits slump to £351.8 million in 2023 from £730.7 million the previous year.
New home completions fell by a third to 9,922 from 14,868 in 2022.
The group said the housing market is set to “remain subdued” and “challenging” in 2024, with little sign of a pick-up ahead of a general election and with interest rates still at their highest since the 2008 financial crisis.
Persimmon said it has seen a slight increase in demand at the start of 2024 as mortgage costs have eased back a little, with its weekly net private sales rate per outlet rising to 0.59 from 0.54 a year ago.
But it said it is having to use incentives to boost demand, such as part-exchange deals.
Shares in the group fell 4% in Tuesday morning trading.
Persimmon said: “With interest rates expected to remain at current levels and a general election on the horizon, market conditions are expected to remain subdued throughout 2024.”
Chairman Roger Devlin said: “While demand remains high, affordability and mortgage availability has been difficult for many of our customers, especially first-time buyers.
“Thankfully, there has been some stabilisation in recent months with mortgage rates having fallen from their peak in July 2023.
“While 2024 will not be an easy year, I remain very confident of the exciting long-term prospects for the group.”
Private market house prices rose 5% to £285,774 in 2023.
But the group revealed that, on an underlying basis, home sale prices came under pressure as an 8%-9% rise in build costs and the use of incentives offset increases.
The group said build costs have eased back to around 3%-5% in 2024.
It is expecting to deliver between 10,000 and 10,500 homes this year, at an average selling price of £280,000 – down 2% on 2023 values.
Persimmon said: “Enhanced competition in the mortgage market and wage growth have contributed to improved affordability albeit it continues to be constrained, particularly for first-time buyers, and demand for homes remains varied across the country.
“Trading in the southern and eastern counties remains more challenging with weaker pricing, offset by a more robust trading performance in the northern regions.”