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Persimmon Homes weather out the lull
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Housebuilder's profits outstrip last year

Ros Snowdon
Deputy City Editor
HOUSEBUILDER Persimmon warned of a slowdown in trading yesterday, but said half year profits would still beat last year's figure.

The York-based property developer said the average selling price of a house was £184,000, a rise of 7.6 per cent on the first half last year. This reflected a four to five per cent increase in comparable prices and the rest came from a move upmarket with an increase in sales of the group's premium Charles Church brand.
While the average national price increase was four to five per cent, some parts of the country fared better than others. Scotland and the South West were singled out as the best performers.
"Generally everywhere else was ok," said Persimmon chief executive John White. "We have seen good visitor levels, but people are taking more time to decide to purchase. The market is undoubtedly slower, but we have completed on a similar number of homes."
The group, which is the UK's biggest housebuilder, will have completed on around 6,000 units by June 30, which compares to 6,058 in the first half of last year. Mr White said the Yorkshire market had traded "reasonably well".
"Yorkshire has been a steady market and we have seen price increases of around two to three per cent. The region has had a good run, but this level of growth is more sustainable. We're certainly not seeing any signs of a price crash."
The group said that while costs and the use of incentives had risen slightly, margins have been maintained at last year's levels of 23.6 per cent. Citigroup Smith Barney analyst Clyde Lewis said: "First-half guidance points to a very robust performance." He added: "Arguably the biggest positive surprise is that margins have been maintained at the same level as last year."
Last year the group made an interim profit of £220.3m and it is confident this will be beaten when it reports its results on August 23.
The positive tone of the trading update was in contrast to a report by property website Hometrack which showed that house prices fell over the past 12 months and the market is showing no sign of recovering.
Persimmon has been generally immune to the slowdown because its houses are at the lower end of the market and it has a good geographical spread. In addition the new-build sector has proved more resilient than the second-hand market.
Total revenues from sales for the full year stand at around £1.8bn, which Persimmon said was at the same level of last year's strong sales position. The group said there was an under-supply of new homes across the UK which reinforced its continuing confidence in the market.
Mr White expected UK housing sales to pick up later this year after 12 months of weak demand. "We expect to see an upturn in the autumn. We would expect to see our volumes increasing through September, October and November."
The group said that cash flow was strong.
 
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