Persimmon predicts resilient housing market

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The Independent Online

Persimmon, Britain's biggest housebuilder, delivered the most reassuring trading update of the industry yesterday when it predicted resilient house prices and an upturn in housing sales in the autumn.

Persimmon, Britain's biggest housebuilder, delivered the most reassuring trading update of the industry yesterday when it predicted resilient house prices and an upturn in housing sales in the autumn.

Despite seeing slower trading than a year ago, Persimmon said it expected pre-tax profits in the six months to June to be above last year's figure of £220m. It completed 6,000 homes in the first half, compared with 6,058 a year ago, and has notched up sales revenues of £1.8bn in the year to date - the same level as last year when the market was still booming. The average selling price rose 7.6 per cent to £184,000.

John White, the chief executive, said: "Our broad geographical spread - from Aberdeen to Cornwall - and the fact that we offer houses for all markets has put us in good stead."

He added that the group had been careful to minimise its exposure to inner-city housing, which is experiencing difficult conditions.

Mr White admitted that the market had slowed in some parts of the UK, but said there was still strong demand in other areas, such as south-west England, Wales and Scotland.

"We're not complacent but confident... There is no sign of the price crashes that have been predicted, and the longer we go on the less likely it is that there will be a crash. We're pretty confident that prices will be resilient," he said.

Since May, the market has been "reasonable and similar to last year", he said. He added that "the autumn will see a bit of an upturn" in housing sales compared with a quiet period last year.

Mr White, who will take over from the retiring chairman and founder Duncan Davidson next year, said the group is benefiting from a 15 per cent increase in sales outlets. While this adds to costs, it also means that Persimmon does not have to chase sales by discounting prices.

"It's having a positive impact in the fact that we are not having to chase volumes. We accept that in tougher times we want more outlets and more products available," he said.

Analysts at Morgan Stanley described the trading update as a "best in class performance".

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