East coast resilience has been boost to housing market says Persimmon

PERSIMMON, Britain's biggest housebuilder by market value, has flagged robust trading, saying the east coast of Scotland had proved more resilient than might have been expected following the financial crash of two years ago.

It came as the group, which has sizeable Scottish operations in Bathgate and Hamilton, as well as its more upmarket Charles Church business, said in a first-half trading update that group turnover rose a quarter to 785 million in the six months to end-June.

Legal completions across the UK increased more than 16 per cent to 4,657 homes (from 4,006), while the average selling price rose 8 per cent to 168,500, with underlying price growth of 3 per cent.

Mike Killoran, group finance director, said the Scottish housing market was performing in line with the rest of the UK and that north of the Border it was "slightly better in the east than the west".

Killoran told The Scotsman: "The financial sector in the east of Scotland was hit two years ago. The fallout is not as bad as it could have been. There is a renewed confidence in the east of the country because the economy has been pretty resilient."

Persimmon still had aspirations to do comfortably over 800 units in the Scottish business this year, he added, compared with 750 in its last trading year - down 15 per cent on the previous 12 months as the downturn bit.

The group said in March that it had returned to the black, with a pre-tax profit of 77.8m against losses of 780m in 2008.

Killoran said Charles Church opened three new sites in the first six months of this year, at Falkirk, Newton Mearns and Corstorphine, Edinburgh.

However, he said despite the Scottish market holding up, the company was "concerned" about the broader economic impact of coming swingeing public-sector cuts on areas with heavy public sector exposure "like Scotland, Wales and northern Ireland".

He said: "People have got to be concerned about what will be the impact of spending cuts. It will not help the housing market in the UK."

The housebuilding sector normally gets a lift in spring and autumn. But Persimmon indicated this had been thrown off course this year by the May general election and uncertainty ahead of the June emergency Budget, and autumn sentiment could be affected by the details of the spending review due on 20 October.

City analysts were impressed by Persimmon's disclosure that its interim operating margins rose to 7.5 per cent from 1.5 per cent a year ago, and group debt fell to 122m from 494m. Cancellations also remained at low levels of about 16 per cent, in line with the previous year, the group said.

Killoran said mortgage availability had improved but was still a constriction on the housing market.