Worst in housing sector is over, says Persimmon |
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Thu, 25 Aug 2005 09:05
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LONDON: Persimmon, the U.K.'s largest house builder, says the housing industry in the country is on a recovery path and it expects the market to improve further. It draws this conclusion from its own performance -- substantial pick-up in sales reservations and a projected profit of 500 million pounds for 2005, a record for the company.
The company said the quarter point cut in interest rates this month has indeed helped restore confidence in the market and home buyers are going ahead with firming up purchases.
It said since July, its sales reservations have gone up by 8 per cent compared with last year. The company's chairman Duncan Davidson said the cut in interest rates and the continuing low unemployment levels along with the strong fundamentals of the country's house building industry provide an optimistic picture for the business in 2005. The company has already booked sales worth 980 million pounds for the second half of 2005.
Persimmon's pre-tax profits increased by 7 per cent to 235 million pounds for the six months ending 30 June, compared with the corresponding previous year period. The average selling price of a house increased to 183,581 pounds compared with 171,082 pounds in 2004. The number of sales recorded was 5,954, marginally lower than 6,058 for 2004 period. Debt stands reduced to 12 per cent from 20 per cent, while the turnover went up to 1.1 billion pounds against 1.04 billion pounds in 2004..
Even the Royal Institution of Chartered Surveyors (Rics) had said that although completed sales for July were 18 per cent lower than in 2004, it was the best result in five months, especially viewed against the 36 per cent drop seen in February. Rics also said house prices have increased in Scotland and the North-west for the first time in a year.
Halifax has also reported that prices are still rising, though at the slowest rate in a decade.
Lower-priced homes account for most of Persimmon's sales, though it is not specifically targeting the undersupplied first-time buyer market. It had lost a government contract to build subsidised housing for first-time buyers.
Davidson said the company continues to open new developments across all parts of the U.K. and gets good levels of visitors to its showhomes. He was confident that the buoyant picture would continue at Persimmon.
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