Shares in housebuilder Persimmon (PSN) rallied 5.1% to £27.46 after it boosted recovery hopes in the sector, restoring its dividend following an ‘excellent start’ to the second half of the year.

The FTSE 100 stalwart said better than expected demand for its homes had allowed it to reinstate the payout it had suspended in late March, with investors set to receive 40p per share.

House buyers have returned in their droves since lockdown measures have started easing, buoyed last month by the Government’s introduction of a holiday on stamp duty, with property portal Rightmove (RMV) saying July was the busiest month in a decade with around £37 billion worth of deals agreed.

UPDATE LIFTS RIVAL HOUSEBUILDERS

Persimmon’s bullish update lifted the shares of rival housebuilders too, with Barratt Developments (BDEV) rising 1.96% to 531.6p, Taylor Wimpey (TW.) gaining 1.13% to 122.7p and Redrow (RDW) increasing 2.45% to 459.6p.

In its half year results to 30 June, pre-tax profit slumped 43% to £292.4 million with revenue down 32% to £1.19 billion and home completions falling 35% to 4,900.

But by the end of the reporting period, chief executive Dave Jenkinson said build rates were back at pre-coronavirus levels.

‘EXCELLENT BUILD RATE GIVES US CONFIDENCE’

He said Persimmon had made an ‘excellent start’ to the second half, with an increase of around 49% in average weekly private sales rates per site since the start of July, and a current forward order book of about £2.5 billion, up 21% compared to a year ago.

‘Our strong opening work in progress position and excellent build rate through the summer give us confidence in a positive second half outturn,’ Jenkinson said.

‘We expect that by the end of September, we will have delivered around 45% of our anticipated second half new home legal completions.’

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Issue Date: 18 Aug 2020