Persimmon sees upside in housing
MAJOR housebuilder Persimmon breathed some warmth into Britain's cooling house market today as it delivered another set of forecast-busting results.
Chief executive John White sees a further rise in prices next year, despite a cooling-off in the past couple of months.
He said: 'We expect house price growth of 11% by the end of the year and further positive price movement in 2005 driven by demand and undersupply.'
Half-year pre-tax profits leaped 45% to £220m, £5m more than the best market expectations, which had been raised in May. Investors get a 30% rise in the interim dividend to 9.1p and a promise the total payout for the year will be up at least 25% to 23p.
Chairman Duncan Davidson noted that, while recent interest rate rises had been subduing, there was no significant increase in the use of incentives for buyers, usually the first sign of a distressed market.
Since the firm's last trading update at the end of June, when sales were up 28% on last year, business has been 'satisfactory with prices remaining stable' and good margins, Davidson added.
Persimmon is on course to sell 12,000 homes for the year to the end of December. It has already booked £1bn of sales for the second half and expects the average selling price for its new homes to rise 11% compared with 2003.
It sold 6,058 homes in the first half, nearly 500 more than last year, at an average price of £171,028, 11% up on the same time last year.
Persimmon also laid down a marker for consolidation. Chairman Duncan Davidson said: 'Our strong balance sheet gives us exciting opportunities for further expansion, organically and by acquisition, if the right situations should arise.'
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