Persimmon sees house sales rise

HOUSEBUILDER Persimmon has suggested that life could finally be returning to the UK housing market as it revealed that sales this year are ahead of expectations.

The York-based group, which made a loss of £780m last year, said that it currently has 6,500 homes reserved, contracted or legally completed with total sales revenue of £960m.

Persimmon said that sales volumes for the first 16 weeks of the year “have continued to be ahead of our expectations” but that prices and margins have remained under pressure.

“Whilst the recent improvement in market conditions is encouraging, we will remain cautious about the outlook until mortgage availability improves further and employment prospects become less uncertain,” it said

“We are, however, confident that our position in the market will provide a strong platform for growth when the market improves.”

The group said that visitor levels to its sites have remained resilient despite being 15% down on the same period last year.

However Persimmon said that cancellation rates are 16% compared to 35% for the last quarter of 2008 and that despite operating from 16% fewer sites than last year, sales volumes are ahead of the same period 12 months ago.

The group completed a refinancing last month and said that its borrowings this month – its traditional seasonal working capital peak – are £680m compared to £1bn last year and it expects debt levels to drop further.

“We continue to focus on rigorous control over working capital which is reflected in the reduction in our active sites and in our holdings of part-exchange property which is currently at a level of £30m,” it said in an interim management statement this morning.