Former Persimmon CEO, Jeff Fairburn, has re-entered the house building limelight in the past few weeks.
You may recall Fairburn departed Persimmon in 2018 after his nine figure bonus payout caused outrage after critics linked his personal financial success with the government-supported help to buy scheme. Persimmon stuck with him for a while despite the negative PR but a very awkward interview between Fairburn and the BBC seemed to be the final straw as Persimmon sought to limit reputational damage and parted ways with him shortly afterwards.
He resurfaced in January 2020 as CEO of Berkeley Deveer, a small Yorkshire based house builder who completed around 100 homes a year.
This appeared to be a relatively low profile appointment by industry standards. However, all that changed when Berkeley DeVeer, aided by a US private equity business, bought Avant Homes: a house builder with regions across the midlands and north of England and a turnover of about 15 times that of Berkeley DeVeer.
Interestingly Colin Lewis, the outgoing CEO of Avant, turned down the opportunity to be Fairburns’ deputy simply stating “I have my own reasons”.
Only time will tell how the new incarnation of Avant performs and how Fairburn’s reputation is perceived by industry commentators.
It seems not even a global pandemic can stem the British appetite for buying homes. The ONS published figures showing an increase of 10.2% in the year to the end of March – the fastest rate of price growth since 2007.
Commentators are putting the demand down to a shift in homeowners requirements for more outdoor space and suitable working from home room. This appears to be supported in that the increase in prices for detached homes is 11% where it is around 5% for apartments.
It’s worth noting that housing completions dropped off significantly during April: 38% lower than March. However, context is important. April’s completions were still higher than any other April since 2007. The discrepancy between March and April may well have been the rush to complete before the anticipated end of the stamp duty holiday – which of course the Chancellor extended.
So what of the future? Is the bubble about to burst? Analysts don’t seem to think so.
Nationwide, the second biggest mortgage lender in the UK, still believes prices will continue to edge higher over the next five years, regardless of the stamp duty holiday coming to an end.
Savills supported this sentiment when they upgraded their forecast from zero to 4% house price growth in 2021 and a total growth of 21.1% for the five years from 2021 to 2025.
Knight Frank are even more bullish with a forecasted rise of 5% on average for the UK for 2021 and 25% over the next five years.