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Persimmon reports 64% rise in profits fuelled by UK Covid property boom

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The housebuilder Persimmon has reported a 64% rise in profits for the first half of the year fuelled by Britain’s unlikely property market boom in the Covid-19 pandemic.

The UK’s biggest housebuilder by market value said on Wednesday it expected its sales to remain above pre-crisis levels, suggesting it would continue to make money for investors even as the government removed subsidies for the housing market.

Pre-tax profit for the first half of 2021 increased to £480m, up from £292m over the same period last year.

The FTSE 100 company, based in York, said its £2.2bn forward order book indicated demand would remain strong, including plans to sell about 6,500 homes at an average price of £253,000. “Customer inquiry levels remain strong and cancellation rates are in line with historical norms,” it said.

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House prices have risen strongly since the start of the pandemic in early 2020 thanks in part to the government’s holiday on stamp duty land tax in England and Northern Ireland. Historically low borrowing costs and years of limited construction of new homes have also sustained prices.

The tax break, introduced by the chancellor, Rishi Sunak, meant buyers did not pay the tax on the first £500,000 of the purchase price. The holiday was extended to the end of June, despite rapid house price growth. The threshold at which stamp duty begins was cut to £250,000 on 1 July, and on 1 October it will return to the pre-pandemic level of £125,000.

Persimmon said it completed 7,406 home sales at an average price of £236,199 in the six months to the end of June, a sharp increase from 4,900 properties completed over the same period in 2020, when construction was disrupted during the first Covid lockdown.

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The company spent £200m on acquiring sites for its land bank, adding 10,272 plots to take its total to 85,771.

Russ Mould, the investment director of the stockbroker AJ Bell, said: “The land grab suggests that Persimmon feels the market is going to remain buoyant for some time to come, which makes sense given the ongoing imbalance between supply and demand, a possible post-Covid shift in demand to bigger, suburban dwellings and ongoing government support (or subsidies) in the form of the latest version of the help-to-buy scheme. That is due to run until 2023.”