Persimmon points to housing market revival
Housebuilder Persimmon delighted investors with a bullish third-quarter update, saying it had already met this year's sales targets and booked a further £500m of sales for 2010.
Full house: Persimmon has already met annual sales targets
The group, named after a Derby-winning horse, also said year-end debts will be ' significantly lower' than its previous guidance of £400m, which will allow it to buy new land and open more sites.
Persimmon chief Mike Farley said: 'The market is encouraging. Buyers are back.
'Prices have stabilised and there is growing availability of mortgages. The focus is now on growing our margins, we are comfortable with our level of debt.'
But Farley tempered his upbeat assessment with a note of caution, saying a general election and concerns about unemployment may hamper activity. He reckons a Tory victory could hit enthusiasm in the sector because of the party's tough planning proposals.
The builder (up 28.5p, or 6%, at 488.6p) will complete sales on 9,000 homes in 2009, and said the average selling price of homes is 6% higher than at
the start of July at £173,000. Recent housing data seems to support the view that prices are rising again.
House prices in October recorded their lowest annual fall since March 2008, and a 1.2% rise on September, according to the Halifax. This was the fourth successive monthly increase in house prices.
The York-based group said it had sold more houses, particularly those with two or three bedrooms, than flats.
But, it said first-time buyers are now being tempted back into the market, making up 18% of the builder's order books in terms of reservations. This was an increase on the 10% they accounted for a year ago.
Keith Bowman, analyst at brokerage Hargreaves Lansdown, said: 'Today's update appears to see the "great escape" for the housebuilding sector continuing.'
It follows positive updates earlier this month from rivals Taylor Wimpey and Redrow.
Taylor Wimpey said the price of new homes had started to climb in the first half of the year, with the average price up 9% compared with the first half of 2008.
Redrow reported a sharp 47% increase in the number of private reservations since July, averaging 45 homes per week.
Galliford Try also recently reported improved sales and income levels in its housebuilding division, with sales up 7% on last year, and said it was 'cautiously optimistic' about the sector's fortunes.
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