Buyer confidence badly shaken says Persimmon
AN “unprecedented tightening” in the mortgage market has led to fewer sales and increased cancellation rates, according to Persimmon.
In March, the housebuilder had reported that visitor levels to its sites were encouraging although sales reservation volumes remained flat.
However, at its annual general meeting (AGM) in York today, Persimmon will warn investors that increased discounting, marketing costs and incentives as a result of shaken consumer confidence will have a negative impact on margins.
It is also postponing any new site developments and is taking close control of its investments in progress.
However, the developer maintained that it is still in a strong financial position despite total sales revenue for 2008 to date being down 24% from £1.8bn to £1.37bn.
Volumes are down by 18% due to an increase in the amount of partnership homes being built.
In a statement ahead of the AGM, Persimmon said borrowings stand at £1bn, but an average term to maturity of more than three years provides “comfortable headroom”.
“While we continue to focus on achieving the best possible selling price in every location it is likely that with the continuation of current conditions the market will become more challenging,” it added.
“We welcome the recent government actions being taken to increase liquidity in
the banking system with the key objective of kick starting the mortgage market.
“For this action to be effective it needs to result in an increase in the availability of credit for house purchasers, particularly first time buyers.
“We believe that the Government should urgently consider additional action to benefit first time buyers by increasing the threshold for stamp duty to support an improvement in activity and help those who are most in need of assistance.”
