Bloomberg News

Persimmon Sells Fewer Homes on ‘Constrained’ Lending Market

July 05, 2011

(Updates with closing share price in seventh paragraph.)

July 5 (Bloomberg) -- Persimmon Plc, the U.K.’s third- largest homebuilder by volume, said it sold 4.7 percent fewer homes in the first six months of the year as the mortgage market remained “constrained.”

Persimmon completed the sale of 4,439 homes compared with 4,657 a year earlier, the York, England-based company said today in a statement. That generated sales of about 715 million pounds ($1.2 billion).

“Conditions in the mortgage market are constrained, but we are seeing gradual improvements,” Chief Executive Officer Mike Farley said in an interview. “The industry is in talks with the Council of Mortgage Lenders about creating a 95 percent loan-to- value product.”

U.K. house prices fell for a second month in June as the growth in the supply of properties for sale outpaced demand, Hometrack Ltd. said last week. Mortgage advances fell 10 percent to 33 billion pounds in the first quarter from the previous three months, the U.K. Financial Services Authority said on June 21.

Persimmon expects a similar number of home sales for the full year. There will be increase in home sales in the second half as the company’s order book at June 30 was ahead of last year at 725 million pounds, the housebuilder said.

The operating profit margin for the period was 9 percent, compared with 8 percent a year earlier, and should reach typical industry levels of profitability about 15 percent in a “couple of years,” Farley said.

Persimmon was little changed at 491.4 pence at the 4:30 p.m. close in London. The stock has gained 18 percent this year, raising the company’s market value to 1.48 billion pounds.

Persimmon’s average selling price was 162,000 pounds in the first half compared with 168,936 a year earlier, as buyers bought smaller homes. That should increase in the second half with the sale of larger properties included in the order book, the company said.

--Editors: Jeffrey St.Onge, Andrew Blackman

To contact the reporter on this story: Tim Barwell in London at tbarwell@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net


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