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Builder enjoys rise in first-half earnings

PERSIMMON has hiked first-half earnings by 57 per cent before exceptional items and revenue by a third as the housebuilder played down suggestions the market is starting to slow.

The company reported pre-tax profits of £212.9 million on turnover of £1.2 billion for the six months ended June 30.

It sold 700 new homes in Scotland over the period - 60 per cent more than at the same stage last year - at an average price of £165,000.

Across the group legal completions were up 28 per cent, meaning Persimmon sold 6,408 homes in the UK over the six months, with the average selling price rising by 4.3 per cent to £186,970.

Mike Killoran, the company's chief financial officer, put the firm's first-half performance down to a combination of "the growth we are delivering... together with the further investment in the business".

He said: "We have brought through just over 14,000 new plots into the land bank, which puts us in a very strong position moving forward.

"What's allowed us to do that is obviously the strength in our cash generation."

Persimmon's interim results followed a survey by Rightmove earlier in the week that pointed to a 2.9 per cent in asking prices between July and August, led by a 6 per cent fall in London.

That came as Nationwide, one of the country's biggest mortgage lenders, said it had detected a cooling in housing market growth in recent months, albeit the building society noted the market was still grappling with an under-supply of housing stock.

Mr Killoran insisted the appetite from lenders to supply mortgages was still strong, and was unconcerned over any potential impact the recent Mortgage Market Review (MMR) would have on the housebuilding sector.

The new rules, which took effect in April, have imposed more stringent conditions on the mortgage application process. It was cited as a factor by Nationwide as it reported a fall in gross mortgage lending to £5.8 billion from £6.4 billion, and net lending to £1.7 billion from £2.6 billion.

Mr Killoran said: "Every management team running a business would just like a sustainable market and I think part and parcel of that is to have diversity of lending source for customers to access mortgage credit and affordable pricing.

"If the MMR and the stance of lenders are to make sure we enjoy a sustainable market over the medium to long term, then we would applaud that discipline."

Mr Killoran praised the impact of the Help to Buy scheme in boosting demand for housing in Scotland, and indicated Persimmon was neutral on the issue of Scottish independence.

Noting that the referendum was a matter "the Scottish population to decide", he said: "Obviously people do need homes to live in and just like elsewhere in the UK there is a shortage of supply and availability in Scotland.

"Hopefully Scottish customers see the attraction of coming on to Persimmon sites and choosing a Persimmon home.

"Regardless of the outcome we are still keen to support the Scottish marketplace in delivering the new homes that are undoubtedly still required north of the Border."

Shares in Persimmon closed up 15p at 1350p.

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