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Mortgage squeeze taking its toll

PUBLISHED: 10:29 24 August 2008 | UPDATED: 21:07 05 July 2010

HOUSEBUILDER Persimmon, revealed tumbling first-half profits as the mortgage squeeze pushed thousands of buyers out of the housing market.

The parent company of Lowestoft-based Persimmon Homes Anglia said last Thursday pre-tax profits slumped 64pc to £100.

HOUSEBUILDER Persimmon, revealed tumbling first-half profits as the mortgage squeeze pushed thousands of buyers out of the housing market.

The parent company of Lowestoft-based Persimmon Homes Anglia said last Thursday pre-tax profits slumped 64pc to £100.9 million as homes sales slid 31pc to 5,501 in the first half of the year.

Despite the “most challenging” conditions in its recent history, the York-based firm, which has cut 2,000 jobs since January, gave investors some hope that a struggling market was beginning to stabilise.

Shares bounced 13pc after Persimmon said it had seen no further worsening in sales volumes since a “significant downturn” in April.

But the Charles Church builder - a bellwether in what is likely to be a grim results season for the beleaguered sector - said prospects depended on a recovery in mortgage finance.

“The current economic conditions, the uncertainties surrounding the general financial markets and mortgage availability will be defining factors in the return to a more normal housing market,” it said.

Chief executive Mike Farley said the proportion of its homes bought by first-time buyers fell from around 17pc to 10pc in the first half of 2008.

“First-time buyers are the people who have been hit hard. We would say whatever the Government can do, do it for first-time buyers,” he said.

But the company also voiced criticism over recent speculation of a “stamp duty holiday” to help out the housing market as those who were about to buy hold off to see if a tax break is introduced.

Persimmon said it was pleased the Government was looking at measures to improve mortgage availability and said it looked forward to the confirmation of any moves “at the earliest opportunity”.

But average selling prices fell 5pc to £181,485 as prices weakened, and the firm slashed its dividend pay-out to shareholders by almost three-quarters to reflect the difficult trading conditions.


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