Persimmon sales rise as lenders focus on new homes

Published:  04 July, 2012

LONDON: Persimmon, Britain’s biggest house builder by value, said its spring selling season beat last year’s despite the weak economy. Persimmon said the average selling price for the year was £167,582, down 2.8% on the previous year, which Persimmon blamed on smaller houses making up a bigger share of its sales.

The builder completed the sales of 4712 new homes in the first six months of 2012, a 6% increase on the previous year. Its average selling price rose 7% to £171,400, reflecting the industry-wide move towards traditional family homes, rather than the city flats which have fallen out of favour. That helped the group’s overall revenues increase by 13% to £805m. Persimmon ended the period sitting on a cash pile of £135m, and plans to return £1.9bn to investors over the next decade.

Although the UK housing market continues to be affected by the weakness in the wider economy, lenders are focused on the new homes market, says Persimmon chief executive Mike Farley. Unlike homeowners, builders will cut prices for properties until they sell, whereas homeowners will often wait for prices to rise once more.

“Lending is still okay for us in the new homes market,” said Mr Farley. “Overall, there is no real new money in the market as a whole.”

The new-build market is also seeing some benefit from the government-backed NewBuy scheme, launched in March. Persimmon said it has now completed about 20 sales under NewBuy, with about 150 homes reserved. It has previously criticised the scheme, warning that lenders’ interest rates on mortgages were too high for the scheme take off.

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