In an end of year trading statement, the firm warned that reservation rates on site had seriously fallen in the final months of the year.
Persimmon said it has launched several initiatives to stimulate demand, including the recent launch of a “10 months mortgage free” customer offer, which generated a strong increase in website enquiries in its first week.
But the house builder warned this morning that it was too early to predict when there will be a recovery in demand.
“We remain focused on achieving quality returns rather than volume and we will provide a further update on the market outlook for 2023, at our 2022 results on 1 March,” said Dean Finch, group chief executive.
He said that Persimmon saw notably weaker customer demand in the second half of the year as concerns over the economy, mortgage rates and the cost of living weighed heavily on consumer confidence.
Overall in 2022 private net sales were 0.69 per outlet per week for the year (2021: 0.83).
The change in market conditions gathered pace in the final months, with private net sales falling to 0.30 per outlet per week in Q4 (Q4 2021: 0.77), with the last seven weeks of 2022 at 0.19 per outlet per week (2021: 0.61).
The trading performance weakened across all geographies with the biggest impact on sales seen in the Southern regions.
As a result of the lower sales rates and elevated cancellations in the second half, the forward sales position has reduced year on year to £1bn (2021: £1.6bn).
For the year as a whole, the strong start helped Persimmon to raise new home completions by 2% to 14,868 units, at an average selling price of £248,600, up 5% on the prior year.
Cash at the year-end was down to £0.86bn from £1.25bn in the prior year.
Finch said: “The change in market conditions gathered pace in the fourth quarter and is reflected in the reduction in our recent weekly sales rates and a lower forward sales position as we enter the new financial year.
“We are taking action to manage the impact of the uncertain outlook for the UK housing market and have already taken action to either renegotiate or pause the start of around 30 sites.
“We expect land spend in 2023 to predominantly relate to the settlement of land creditors, and we will take a highly selective approach to any new land purchases, investing only where we see the very best opportunities.
“However, with high quality land holdings, a strong balance sheet and an experienced management team, Persimmon is well placed to navigate this challenging short-term backdrop, while continuing to take advantage of any opportunities that may arise.”
