Persimmon expects the housing market to remain “highly uncertain” in 2024 although it delivered more sales than expected in 2023.

However, the housebuilder said moderating build costs should benefit new home completions in 2024 and the long-term outlook for new homes is still favourable.

The company said it completed the sale of 9,922 new homes in 2023, ahead of previous guidance, with a particularly strong delivery in the fourth quarter.

However, this was still 33% lower than the year before.

Persimmon said it had seen a sustained pick up in interest throughout the year from the lows of the fourth quarter of 2022, albeit with demand lower than previous years.

It also reported an improved start to 2024 with private forward sales ahead of last year driven by the year-on-year improvement in fourth-quarter sales rates.

Private average selling prices increased in 2023 by around 5% to £285,770 which largely reflected the mix of developments and house types sold, the company said.

Pricing was firm in the first half of the year, with some softness and increased use of incentives experienced during the second half.

Full-year operating margins are expected to be in line with those delivered in the first half at around 14%.

Persimmon’s chief executive Dean Finch said the firm “performed well in challenging market conditions”, with sales rates “relatively robust” over the year.

“We have successfully balanced our need to control costs, whilst investing in the business to position it for sustainable growth when conditions improve,” he said.

The upcoming UK general election could cause a few wobbles in the market if buyers and sellers sit on the sidelines waiting to see which rabbits are pulled out of the hat by the winning political party before committing to a transaction

Russ Mould, investment director for AJ Bell, said: “Persimmon is right to be cautious about the outlook, saying that market conditions will remain highly uncertain this year.

“No-one knows with certainty how the Bank of England will act with interest rate policy.

“Furthermore, the upcoming UK general election could cause a few wobbles in the market if buyers and sellers sit on the sidelines waiting to see which rabbits are pulled out of the hat by the winning political party before committing to a transaction.”

But he added there are “tentative signs” that hopes of borrowing costs coming down is encouraging more people to think about purchasing a property.

Anthony Codling, head of European housing and building materials for investment bank RBC Capital Markets, commented: “A positive year-end trading update from Persimmon delivering volumes 7% ahead of expectations, the other key trading metrics also nudged up, including average private selling prices which rose c.5%. The use of incentives rose from 2% to 4% in the year.

“Bulk deals were used strategically and aided volumes, but in a tough market it is probably wise to take volumes where you can and exit tough sites if given the opportunity. In our view, the housing market will be kinder to Persimmon in 2024 than it was in 2023 and the group starts the year on a firm footing and on the front foot.

The Edison Group’s Andy Murphy added: “Persimmon’s trading statement showcase the company’s resilience amidst the challenging market conditions for UK housebuilders. The previous forecast of 9,500 new home completions were surpassed, the average selling price was up by 3% to £255,750 and current forward sales was up 2% to £1.1bn.

“Rising mortgage rates, lower buyer demand and inflated costs of raw materials have taken its toll on the housebuilding company as new home completions for 2023 only came to a total of 9,922, down a third from the previous year.

“Persimmon will continue to navigate these challenging market conditions into 2024 as macro-economic worries temper the hopes for the recovery of the British housing sector, despite easing mortgage rates.”