Housebuilder Persimmon joins Taylor Wimpey in flagging higher costs

Housebuilder Persimmon joins Taylor Wimpey in flagging higher costs
FILE PHOTO: Builders construct modular Space4 homes on a Persimmon development in Coventry, February 22, 2017. Picture taken February 22, 2017. REUTERS/Darren Staples/File Photo -
Darren Staples(Reuters)
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(Reuters) - Persimmon, Britain's second-largest housebuilder, on Wednesday reported fewer reservations so far this year and joined smaller rival Taylor Wimpey in warning about rising costs.

Uncertainty from Britain's exit from the European Union has sent chills through the property market, with data showing house prices rose at the weakest rate in six-and-a-half years in February. At the same time, the cost of building homes has also surged, dealing a blow to margins across the sector.

Persimmon, which focuses on building cheaper family homes, said it expects overall build costs to rise by about 4 percent for the year.

Taylor Wimpey, the nation's third-largest homebuilder, said last week that costs had risen more than expected early this year, which would weigh on annual profit margins.

Persimmon said forward sales revenue so far in 2019 fell to 2.70 billion pounds from 2.80 billion pounds a year earlier.

"Given the increased uncertainties around the future performance of the UK economy we have remained very selective with the acquisition of new land during the period," Persimmon said, even as it affirmed confidence in its future prospects.

The company, however, said it was seeing resilience in the market for new houses since the start of the year, as high employment levels and low interest rates support consumer confidence.

(Reporting by Samantha Machado and Shashwat Awasthi in Bengaluru; Editing by Saumyadeb Chakrabarty)

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