Shares in FTSE 100 builder Persimmon are surging as its results defied general election uncertainty

pulse

July 5, 2017 9:57 AM

Persimmon said UK buyers took 'the snap UK General Election in its stride.'

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LONDON — Shares in housebuilder Persimmon surged nearly 5% on Wednesday before falling back slightly after the group posted solid half-year results.

The FTSE-100 listed firm said that sales between January and June rose by 7% year-on-year and were unaffected by uncertainty surrounding the general election on June 8.

Completions rose by 8% to 7,794 new homes, up from 7,238 at the same stage in 2016.

The trading update said: "We have continued to experience good levels of customer demand since the Group's AGM trading update on 27 April 2017, with the market taking the snap UK General Election in its stride.

"Consumer confidence remains resilient and compelling mortgage rates continue to offer good support to new home buyers."

Persimmon shares were up 3.58% from the open at 9.27 a.m. BST (4.27 a.m. ET):

Analysts warned that future results could be knocked by a hike in interest rates, which would cause mortgage rates to rise.

Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said:

"Momentum continues to build at Persimmon, and indeed across the housing sector, but rising interest rates remain something of a bogeyman. Shares took a knock after three Monetary Policy Committee members voted to increase interest rates earlier this month, taking us a step closer to the first rate rise in ten years.

"As things stand, we think those concerns are a little overblown. It looks highly unlikely that interest rates are going to rise rapidly, and we think households should be able to stomach a return to the 0.5% base rate we saw before the referendum pretty comfortably.

"In any case, Persimmon’s geographic diversity and relatively low exposure to London and the South East means it’s less exposed to the areas where affordability has become most stretched and a rise in mortgage rates would be most damaging."

It will publish its full half-year year results to June 30 on August 22.

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