Persimmon hopeful despite credit crunch

Housebuilder Persimmon today signalled that recent interest rate cuts had helped improve consumer confidence as the firm remained cautiously optimistic for 2008.

The Charles Church owner said the impact of the credit crunch on the housing market appeared to be "easing a little" following rate cuts in December and February.

York-based Persimmon said weekly sales volumes were on the up and current sales cancellation rates down a third from levels seen during the autumn. The group expects sales to grow during the next six months.

Unveiling its full year results for 2007, Persimmon posted annual pre-tax profits of £585.1m, up from £582.1m during 2006 and well within the range forecast by the City.

Group chairman John White said he remained cautious after what had been a "challenging" year, but added: "When confidence returns and sentiment improves we anticipate a return to a stronger market."

Persimmon said it had experienced a slower start to trading early this year, with visitor numbers down 13 per cent compared to this time last year.

But the figures were now on the rise, and the quality of the potential buyers remained high, the group added.

Persimmon also said it had seen sales cancellation rates return to "more normal" levels of around 20 per cent, compared to rates of over 30 per cent during the autumn at the height of the credit crunch.

The firm's current order book was £1.05bn, compared to £1.3bn for the same time last year.

"Whilst this is lower than the equivalent figure for 2007 it nevertheless represents a healthy level of sales at this early stage of the year," the group said.

Persimmon said average selling prices across the group increased by 1 per cent to £189,558 last year.

The firm sold 7,903 homes during the second half of last year, down on the first half completions figure of 8,002. Total sales for 2007 were 4 per cent down compared to the prior year.

Sales prices performed best in Scotland, up 4 per cent, and across the group's Central division, which also posted an average rise of 4 per cent.

Persimmon's premium building arm, Charles Church, saw average sales prices go up by 2 per cent to £257,009, although volumes dipped 11 per cent to 2,579.

Overall group revenue was also 4 per cent down to £3.01bn.