Persimmon rejects Bank housing warning

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The Independent Online

Persimmon, one of Britain's leading housebuilders, has hit out at recent comments from the Governor of the Bank of England warning of falling house prices.

Persimmon, one of Britain's leading housebuilders, has hit out at recent comments from the Governor of the Bank of England warning of falling house prices.

Earlier this month Mervyn King said that anyone involved in the buying of a home should "consider carefully" that mortgage rates could rise and house prices slump.

Delivering an upbeat trading statement yesterday, John White, the chief executive of Persimmon, said the statement from Mr King was ill-advised and badly timed.

"The market had returned to stable and sensible levels at the end of April, before these remarks were made," Mr White said. "The market had already adjusted and it was unnecessary at that time to say these things."

In a widely reported speech to business leaders in Glasgow, Mr King had said: "After the hectic pace of price rises over the past year it is clear that the chances of falls in house prices are greater than they were. So anyone entering or moving within the housing market should consider carefully the possible future paths of both house prices and interest rates."

Mr White suggested that some homebuyers would have been "quite understandably unnerved by this", with the effect likely to have been felt most acutely by first-time buyers. The Bank of England's Governor made his comments on 14 June, and Mr White said it was too early to say how much impact the remarks would have."This just added to the uncertainty. It is the first-time buyers who have to be most careful [about buying]," Mr White said.

However, he pointed out that new homes remained "good value", with Persimmon seeing prices increases of 10 per cent this year - about half the rate shown in surveys of all house purchases. "In our view this reflects the sustainability of new house prices and illustrates the competitiveness of the new housing market. This also supports the continuing affordability of new homes, despite the backdrop of a rising interest rate environment," Mr White said.

Persimmon said it would beat City expectations for its interim results, with an 8 per cent rise in sales for the period, at an average price of £170,000.

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