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The Persimmon share price is a top FTSE 100 bargain and I’d buy it today

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The Persimmon (LSE: PSN) share price is up almost 8% today as the outlook brightens considerably for the UK property market.

There are two reasons why FTSE 100 housebuilder Persimmon is putting on such a show today. The first is Chancellor Rishi Sunak’s stamp duty holiday, announced in yesterday’s Summer Statement.

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This comes into force with immediate effect for properties up to £500,000, and will save buyers up to £15,000. This is clearly going to lead to an upsurge in demand, especially since buy-to-let investors and second homeowners are included.

Bargain FTSE 100 buy

Politicians are desperate to keep the housing market moving, given the impact on public morale of a house price crash. Persimmon is going to benefit, as are the other major housebuilders. Yet their share prices haven’t risen as much. Barratt Developments, Crest Nicholson Holdings, Redrow, and Vistry Group are all up today, but only by modest amounts.

That brings me to the second reason why the Persimmon share price is buoyant today. This morning it published a first-half trading update running to 30 June, which obviously contains horrible figures due to the pandemic, but signs of recovery as well.

Revenue fell from £1.75bn to £1.19bn over the six-month period, with completions also falling markedly. The good news is that the average selling price actually rose from £216,942 to £225,050. Such resilience is good to see.

The Persimmon share price enjoyed a further lift after management reported positive customer demand since reopening in England six weeks ago. Private sales reservations have averaged 278 new homes a week, up 30% on last year.

The £8bn FTSE 100 company cancelled its April dividend and postponed its annual final dividend, which was due in July. However, at the end of the second half of this year, it will re-evaluate payment of a dividend for the year to 31 December. A resumption would give the Persimmon share price a further lift.

Chief executive Dave Jenkinson said it is entering the second half in a “strong position”, with forward sales up around 15% year-on-year, and cash holdings totalling around £830m.

I’d check out the Persimmon share price

The pandemic may drag on, but I cannot see the government ordering another full-scale national lockdown. The nation’s economy and mental health couldn’t stand it.

The market could see a lot of forced sellers when furlough ends in October, hitting house prices with a knock-on for new builds. Demand for property could fall off a cliff when the stamp duty holiday ends on 31 March 2021.

The Persimmon share price has also been underpinned by the Help to Buy scheme. That will be restricted to first-time buyers in 2021, and scrapped in 2023. I have a sneaking feeling that it may be extended again.

The housing market is being propped up by government stimulus, just like the stock market. Housebuilders have been fantastic stocks, giving investors a solid blend of share price growth and dividend income. The Persimmon share price is still 20% below its pre-pandemic pick, and looks like a stock market crash bargain to me.

The housing market is too big to be allowed to fail. That’s why I’d buy Persimmon today.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Redrow. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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