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House builder Persimmon in Scots sales rise

PERSIMMON has announced it sold around 1100 homes in Scotland during 2013, which was slightly ahead of expectations.

JEFF FAIRBURN: Says the firm has made preparations for when the Help to Buy scheme is withdrawn.
JEFF FAIRBURN: Says the firm has made preparations for when the Help to Buy scheme is withdrawn.

The house builder said continued strong trading towards the end of the year saw it end more than 29% ahead of the 850 units completed in 2012.

The company had predicted, in November, that Scottish sales would be around 25% ahead year-on-year.

Finance director Mike Killoran said he was hopeful of a further uplift in 2014.

He said: "We are very pleased with how the Scottish market has performed and obviously that is without the Help to Buy offer being available for most of [2013] as it only came in at the end of October or early November.

"I would expect further progress to be made in 2014 and further growth.

"I wouldn't have thought it would be at the same level but it may be about 10% or perhaps a bit better as we have some good new sites coming through."

Mr Killoran highlighted developments in Dumfries, Irvine, Portlethen and Bathgate as among the locations that Persimmon will be active on this year.

He also believes Help to Buy, where the second phase of the scheme is available across the UK and offers a mortgage guarantee of up to 15% on the cost of a home worth as much as £600,000, will have a greater impact in the Scottish market this year.

The first phase of the funding mechanism was only available in England and Wales but still supported around 30% of Persimmon's home sales in the second half of 2013.

Mr Killoran said: "We would be looking to continue to invest significant sums of the money [in land] north of the Border to ensure we are delivering the product customers are looking for.

"There has been no slowdown in demand. If anything with Help to Buy then we would hope for a bit more support coming through in Scotland."

While Mr Killoran suggested political events, such as the Scottish independence referendum and a UK general election in 2015, may have some effect on buying patterns he believes the drivers of the housing market remain strong.

He said: "If you move through 2014 we would expect the market to be on a good firm footing with good sentiment.

"There is a certain amount of vibrancy in the Scottish economy, which will continue to support the [housing] market."

Across the UK, Persimmon said its 2013 revenue grew 21% to £2.1 billion with house sales up 16% to 11,528.

Average prices were up 4% from £173,823 to around £180,900, which the company attributed mainly to it building more larger family homes.

Mr Killoran said: "We have some regions where prices are nudging forward. where in other areas we do still run into down valuations on occasions.

"There is no consistent picture of house price inflation."

The rise in sales is predicted to lead to "strong underlying pre-tax profit growth", with analysts expecting a number in the range of £293m to £323m.

Persimmon said it entered 2014 with the value of forward sales up 41% from £645m to £908m.

The number of reserved and exchanged private sales was around 55% ahead at more than 3000 while affordable home sales were running 9% higher.

Persimmon has started the year with 390 active sites around the UK and has pencilled in opening up 90 more between now and the end of June.

Around 17,600 plots of new land were bought in 2013 with 5500 of those converted from Persimmon's existing land bank.

Chief executive Jeff Fairburn said he was confident about the year ahead and indicated the company was preparing for when Help to Buy may be withdrawn.

He said: "We have other things that we can do to mitigate that at the end of the period. There will be more mortgage products available I believe, and ultimately we have the facility to reintroduce our own shared-equity products."

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