Housebuilder Persimmon sees profits rise 40%

Persimmon has been boosted by government funding schemes. Picture: TSPL
Persimmon has been boosted by government funding schemes. Picture: TSPL
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HOUSEBUILDER Persimmon said yesterday it was stepping up construction activity after government backing for buyers helped half-year profits jump 40 per cent.

The group said it was opening new sites as both the Scottish Government’s MI New Home scheme and the wider-ranging Help to Buy programme south of the Border breathe new life into the housing market.

Persimmon reported no evidence that Scottish buyers were suffering by comparison to their English counterparts.

Finance director Mike Killoran said: “We are seeing a good market in Scotland despite the fact that there isn’t an equivalent of the Help to Buy scheme yet. Reservations are about 20 per cent ahead of last year.”

He said the company opened more than a dozen additional sites north of the Border in the first six months of the year, including at Bathgate, Bishopton, Dalkeith and Falkirk.

Between 10 and 15 per cent of reservations this year have been from customers using the MI New Home scheme. A further 25 per cent of buyers have been using the firm’s own part-exchange scheme, and Killoran, pictured below, said the group has no problems selling the older homes it acquires.

“We are finding that part exchange is working very well,” he said. “In the second hand market, property is selling, providing its priced correctly.”

Across the UK, York-based Persimmon said underlying pre-tax profits for the first half of the year jumped to £135.3 million, from £96.9m a 12 months earlier. Legal completions rose 7 per cent and forward sales increased by more than a fifth.

The firm said that house prices were stable but its average selling price had advanced 5 per cent to £179,199 as it sold an increased proportion of larger family homes. Group revenues advanced 12 per cent on the same period a year before, to £899.9m.

It said it expected demand from home buyers to continue picking up over the coming months as the housing market recovery gathers pace.

The group plans to open a further 85 sites by the end of the year, adding to 390 already under way.

Persimmon told investors: “The group is working hard to increase production in response to the improved demand evident in all our regional markets.

“To deliver the volume to meet this increased demand, we are maintaining our strong investment in land and stepping up investment in construction.”

The group also reported that it reached its target margin range of 15 to 17 per cent 18 months ahead of schedule.

The strategic plan aims to return £6.20 per share to investors by the middle of 2021, a total of £1.9 billion. The firm said it is making good progress on the plan, which also involves growing the business.

There have been fears that some mortgage support schemes risk stoking a fresh house price bubble, while the supply of homes remains constrained.