Persimmon says housing market is on the mend

Click to follow
The Independent Online

Persimmon, one of the biggest housebuilders in the country, has seen a sharp pick-up in sales reservations over the late summer and the company said yesterday it expects market conditions to improve further in the autumn.

The company is on course to make a profit of about £500m for 2005, a record for Persimmon, despite difficult market conditions for most of this year. The news adds to growing evidence that the worst may be over for the housing market.

Last week, the Royal Institution of Chartered Surveyors (Rics) said that although completed sales for July were 18 per cent lower than in 2004, it was the best result in five months and a significant rebound from the 36 per cent drop seen in February. House prices even increased in Scotland and the North-west for the first time in a year, Rics said. Separately, Countrywide, the UK's largest estate agency owner, said this month that July had been a turning point, with house sales outpacing 2004 levels for the first time this year.

Persimmon said that since the beginning of July, sales reservations had been 8 per cent higher than last year. Duncan Davidson, the chairman, said: "The recent reduction in interest rates, continuing low unemployment levels and the good fundamentals of the UK housebuilding industry, together with the strong position of Persimmon's business, give us great confidence for the future. In anticipation of the normal increase in activity during the autumn months we remain optimistic for the business in 2005 and are well placed for 2006 and beyond."

The company has had to offer buyers greater incentives and has increased the number of sites it is selling by 11 per cent to maintain sales levels. Analysts said Persimmon appeared to have fared much better than other builders in July, partly as a result of the increased number of sites. The company said it has already booked sales worth £980m for the second half of 2005.

For the six months to 30 June, the company's pre-tax profits rose 7 per cent to £235m. The average selling price rose from £171,082 for the period in 2004 to £183,581. The volume of sales was steady at 5,954, a little less than the 6,058 achieved last year.