By Aby Jose Koilparambil and Suban Abdulla
(Reuters) -Britain's Persimmon (LON:PSN) on Wednesday said it expects trading conditions to remain challenging this year as wider economic woes continue to fuel affordability concerns despite signs the slowdown in the housing market could be easing.
High borrowing costs have prompted British developers to trim targets and profit outlooks in recent months. But a decline in mortgage loan prices amid speculation the Bank of England might cut interest rates earlier than previously expected has encouraged some buyers to return to the market.
"We anticipate market conditions will remain highly uncertain during 2024, particularly for first-time buyers and with an election likely this year," Persimmon said.
The housing sector, which boomed during the COVID-19 pandemic, has become a major political issue in Britain ahead of a general election Prime Minister Rishi Sunak is expected to call later this year with his Conservative Party behind the opposition Labour Party in opinion polls.
The York, northern England-based company said current forward sales - a key industry measure of near-term demand - was up 2%.
Its shares jumped around 4% in early trade and the stock was among the top gainers on the FTSE 250 index.
Persimmon did not give any forecast for the current fiscal year.
"Clearly the upcoming spring selling season is the next key catalyst for the sector and key is how quickly Persimmon can build its site numbers back and at what margins," analyst at Investec said in a note.
The company, whose homes range from studio apartments to five-bedroom houses, said private average selling price for its homes rose about 5% to about 285,770 pounds ($363,156)in 2023.
Persimmon said it built 9,922 new homes in 2023, ahead of its previous forecast of 9,500 homes.
The group said it plans to open about 30 outlets in the upcoming spring selling season with an aim to reach pre-pandemic levels over the medium term.
($1 = 0.7869 pounds)