UK homebuilder Persimmon has today beaten first-half profit expectations and forecast higher home sales in 2026, but caution about next year's margin growth weighed on shares as higher costs and affordability concerns persist.
Marketing campaigns such as a reduced upfront deposit and strong pricing helped first-half deliveries and earnings, but elevated interest rates and sticky inflation in Britain's slowing economy still pose a concern as the industry grapples with weak demand.
"As we look ahead, the pace of margin progression will be impacted by diminishing embedded build cost inflation, on-going affordability constraints and increased industry-wide costs," the company said in a statement.
Persimmon's caution mirrors that of rivals Taylor Wimpey, Vistry and Berkeley, which have all warned that challenges are likely to persist throughout the year.
"Some caution highlighted around FY26 margin progression is likely to dampen the enthusiasm around scale of profit growth in 2026 for some in the market, but a good performance and delivery overall," said Investec analyst Aynsley Lammin.
In 2026, Persimmon expects to deliver about 12,000 homes, compared with its 2025 target of 11,000 to 11,500 homes.
Operating margins this year are expected to come in at 14.2% to 14.5%, with 2026 levels expected to be similar, it said.
Lammin said the 2026 margin forecast could lead to a downgrade of analysts' profit estimates.
The company, which operates under the brand names Persimmon Homes, Charles Church and Westbury Partnerships, reported a rise of 11% in underlying pre-tax profit for the first half ended June 30 to £164.9m, beating the £161.1m analysts expected in a company-compiled poll.
