The latest upbeat set of numbers from the housebuilding sector, this time from Persimmon (PSN), are pulling the sector higher as Brexit worries subside.
The sector as a whole (see black line in chart below) has nearly recovered all the ground lost since the result of the vote on UK membership of the European Union was announced.
This makes sense in one regard, there has been little sign of any Brexit impact in the first half results from most of the housebuilders. However, these updates largely cover the period before the referendum result.
More relevant are comments on current market conditions. Persimmon says its private sale reservation rate since 1 July was 17% higher than at the same time in 2015 and anticipates a ‘good autumn sales season’ according to chief executive Jeff Fairburn.
Davy, which has an ‘underperform’ rating on the stock, says: ‘The outlook statement from Persimmon is one of the more bullish views given by a UK builder since the EU referendum.’
But a number of leading indicators on the housing sector suggest a slowdown is coming. The latest survey of the residential housing market from the Royal Institution of Chartered Surveyors posted the weakest reading in three years.
ETX Capital analyst Neil Wilson says: ‘Coupled with robust retail sales figures out last week, upbeat reports from housebuilders suggest worries about Brexit may be subsiding.
‘Of course this might just be the calm before the storm. Earnings reflect only the first half of the year and although housebuilders are upbeat about the next six months no one knows for sure what the economic fallout really will be.
‘If unemployment rises as expected the impact on housing and retail sales will be a little less upbeat than these snapshots suggest.’