Loads of FTSE 100 stocks have fallen over the last month, but the Persimmon (LSE: PSN) share price has fallen harder than most. While the blue-chip index as a whole is down around 6.5%, the housebuilder has plunged 26%.
It’s almost the worst FTSE 100 performer of all. But one stock has had an even tougher time of it: Barratt Redrow. Which just happens to be in the same line of business. Their shares are crashing because of events in the Middle East. But why are British builders bearing the brunt of today’s volatility?
They do seem to be on the front line of every crisis. From Brexit to Covid to the cost-of-living crisis, everybody wonders what it means for house prices. Usually, it doesn’t mean anything good, and that’s the case here.
FTSE 100 housebuilders take a beating
Companies like Persimmon are set to get squeezed from every angle. The energy shock will drive up the cost of building materials, which need transporting, and threaten supply chains too.
Buyers will be nervous about committing to a property purchase at the moment. Especially if they need a big mortgage, and haven’t arranged it yet. That could hit sales, order books, and prices. This is a huge blow because builders have spent a lot of time and money creating their product, and need a return on that investment.
The Iran crisis struck just as things were finally starting to look brighter. In January, Persimmon reported a 12% increase in completions in 2025 to 11,905, with average prices up 4%. The board reported an “encouraging” start to 2026. It was on track to achieve current market expectations of underlying profit before tax in a range of £461m to £487m in 2026. Now all that’s up in the air.
Low valuation, high yield
Markets were expecting interest rates to start falling this year, but suddenly we’re expecting them to rise. The Persimmon share price was on the up before Iran. It’s only down a relatively modest 10% over the last 12 months. But it’s down almost 65% over five years.
Some investors may read all this and decide they shouldn’t go anywhere near housebuilders today, but there are several reasons to be tempted.
Persimmon shares look cheap after their recent crash, with a forward price-to-earnings ratio of just 10.6. The forecast dividend yield is a stunning 6% for 2026, rising to 6.64% in 2027. A word of warning though. This cannot be relied upon, as current events could force a cut.
Investing is cyclical, and with Persimmon shares cheaper than they were a full decade ago, I think they’re worth considering. But as the Iran crisis drags on and the UK struggles, investors need patience and strong nerves. As with any stock today, I’d recommend drip feeding rather than going all in. We just don’t know what will happen from one day to the next. But there are some brilliant bargains out there and Persimmon looks like one of them. And I can see plenty more.
