Persimmon suffers from mortgages shortage
A shortage of mortgages hit Britain's property market as housebuilding giant Persimmon failed to see the traditional autumn pick-up.
Pick-up: Autumn and new year are traditionally very busy for housing market
The group revealed it had not experienced the normal increase in visitor levels and reservations in recent months, although weekly sales did increase gradually during September.
Autumn and the new year are traditionally among the busiest times of the year for the housing market.
But Persimmon - the UK's second biggest housebuilder - joined rivals in warning that the lack of availability of mortgages, particularly to first time buyers, was a 'major obstacle' for customers.
Last week Redrow complained of a mortgage famine and warned that regulators risked stifling the market by restricting banks' ability to lend.
Persimmon's trading update comes on the same day that property website Rightmove said sellers had dropped asking prices by 3.2% in November - the biggest monthly drop in asking prices in nearly three years.
However, Persimmon reported that sales volumes had remained stable with prices and margins holding firm despite the wider market troubles.
Persimmon is on course to increase sales by 10% this year and expects to complete sales of all of the 9,400 homes it will finish building in 2010, an increase of 5% on last year.
It has already reserved more than £460m of sales beyond 2010.
Chief executive Mike Farley said banks needed to lend more and ask for smaller deposits. He called for banks to return to lending 95% of the value of the property, rather than asking borrowers to stump up 25% deposits.
'The crucial thing is the lack of mortgages, that's what's holding the market back' he said.
'People can find 5% deposits without too much problem, but when you are asking them to find £40,000 or £50,000 that's a bit daunting.'
He said sales in autumn had also been affected by uncertainty created by October's spending review.
Sales had increased marginally since the review, but not enough to make up for the slower-than-expected period previously.
'Not surprisingly, people were waiting to see the outcome of the spending review before they took a decision about buying a house,' he said.
'They will hopefully make some kind of decision in the new year, traditionally the most important time for the housing market.'
Persimmon has opened 60 new sites since June and plans to open another 15 by December, he added. The housebuilder has doubled its margin to 8% over the past year, helped by building more family sized homes and less apartments.
It announced the end of a two year dividend drought in August when it reported improved trading in the first half of 2010.
The Charles Church builder said it traded well over the six months to June 30 as revenues lifted 27% to £776.6m on the back of a 16% increase in new home completions and a rise of 8.6% in average selling prices.
The former FTSE 100 company restored its dividend with a pay-out of 3p a share - the first such award since it offered 5p a share in August 2008. The move followed underlying profits of £39.4m for the half-year, which compared with losses of £16.7m last time.
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