Persimmon in upbeat mood

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The Independent Online

Persimmon, the country's biggest housebuilder, still expects bigger profits this year than ever before.

The City has pencilled in annual profits of about £467m, up a third on last time.

And yesterday John White, Persimmon's chief executive, reiterated his pledge to lift last year's 23p dividend by at least 25 per cent.

Unlike its rivals, the York-based company expects buyers to return to the market next year, when it forecasts house prices will grow between 2 and 4 per cent.

Mr White said: "There's been stabilisation of prices and there is a lot of good demand out there, a lot of visitors to our sites, but they're just deferring their decision for the time being." He blamed "damaging comments" from the press more than further potential interest rate rises for unsettling would-be buyers.

Persimmon reckons Britain's housing market remains basically strong, with historically low interest rates, high employment and a robust economy.

A statement accompanying an update on recent trading read: "We believe that the continuing under-supply of new housing, in addition to the effect of the deferment of purchasers' decisions to buy a new home, will support an upturn in volumes of house sales from current levels."

The upbeat comments lifted Persimmon shares 20.5p to 699p. Dresdner Kleinwort Wasserstein again told clients to buy. The rival broker Chevreux repeated that it thought the shares would outperform the wider market.

Persimmon, which posts full-year results at the end of February, is far more optimistic about prospects for 2005 than its rivals. Last week, the retirement flats builder McCarthy & Stone and the housebuilder Wilson Bowden warned of challenging times ahead.

A survey by the Royal Institute of Chartered Surveyors revealed yesterday that house prices are falling at the fastest rate since December 1992 - the tail-end of the last property crash.

It found the number of surveyors reporting a fall in prices outnumbered those seeing a rise by 48 per cent in the three months to November.

Enquiries from new buyers were steadier, improving in London for the first time in eight months, the Rics survey reported.