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Housebuilder reports fall in sales

PUBLISHED: 10:25 10 January 2008 | UPDATED: 19:23 05 July 2010

Housebuilder Persimmon has revealed uncertain market conditions had left it nursing a 14pc fall in forward sales at the start of 2008.

Persimmon said the year-on-year dip to £603m reflected weaker confidence in the last three months of 2007, although it predicted falling interest rates would boost activity levels ahead of the spring selling season.

Housebuilder Persimmon has revealed uncertain market conditions had left it nursing a 14pc fall in forward sales at the start of 2008.

Persimmon said the year-on-year dip to £603m reflected weaker confidence in the last three months of 2007, although it predicted falling interest rates would boost activity levels ahead of the spring selling season.

Persimmon added in a trading statement: “We believe that the underlying fundamentals for our industry remain intact and supportive.”

The impact of tighter credit markets also meant the number of sale completions by Persimmon fell 5pc to 15,905 in 2007.

However, it said sales prices remained resilient with the average cost of a property increasing to £189,558 from £188,129 a year earlier.

Persimmon, which has a significant presence in Norfolk and Suffolk, with a regional headquarters at Oulton Broad, said this improvement was achieved despite a higher proportion of affordable homes.

Its construction sites include the former Norfolk and Norwich Hospital site in Norwich which it is developing with sister company Charles Church, as well as sites in Carlton Colville, Harleston, Diss and West Lynn.

With the company also benefiting from tight cost controls, Persimmon said it was on course to meet the mid-point of City expectations for 2007 profits.

The company posted record profits of £281m in the first half of 2007, but warned of a “challenging” market back in August and conditions have worsened since then.

However, it added it was operating from 7pc more sites than in January 2007, which it said should support its sales position this spring.

Persimmon added: “It is too early in the New Year to predict exactly how the market will develop over the next few months. However, we are confident that our focus on cash management through these more challenging times will ensure that when the market improves we are well set to take advantage of it.'

Persimmon has a strong balance sheet and is often linked with more industry consolidation moves following its 2006 acquisition of Westbury.

It is under pressure to complete further deals after Barratt Developments paid £2.2bn for Wilson Bowden and George Wimpey and Taylor Woodrow completed a £5bn merger.

Numis Securities said it forecast pre-tax profits of £600m for 2007 and 2008, although this year's numbers may be reduced to reflect lower levels of activity.

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