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Persimmon profits up 52% as Scottish sales take off

HOUSEBUILDER Persimmon has posted a 52% rise in profits and says sales in Scotland so far this year are around 10% up.

POSITIVE: Group managing director Jeff Fairburn said the Funding for Lending scheme had helped to increase mortgage accessibility.
POSITIVE: Group managing director Jeff Fairburn said the Funding for Lending scheme had helped to increase mortgage accessibility.

Pre-tax profits increased from £148.1 million to £225.1m across 2012 on the back of 12% revenue growth from £1.54 billion to £1.72bn.

The company completed 9903 homes, up from 9360, while the average selling price grew 6% on the year to £175,640.

The north division, which includes Scotland, accounted for the largest number of new homes at 2236 although average selling prices were down around 2% due to a wider mix of affordable developments.

Persimmon intends to boost its number of construction sites across the UK by around 5% to 390 before the summer as it expects demand to remain steady.

Mortgage availability remains a constraint in the sector but the UK Government-backed Funding for Lending scheme is helping to reduce mortgage interest rates while further publicly backed equity schemes are also having an impact.

Jeff Fairburn, group managing director, said: "Funding for Lending has really helped and we have seen mortgage rates come down circa 45 basis points on standard mortgages this year and 30 basis points on new buy.

"That is giving more people access to affordable mortgages."

Mr Fairburn said the company is now seeing regular sales from the Scottish MI New Home scheme.

He said: "It was introduced after the English version which is called New Buy. Our experience was New Buy got off to a slow start with around 5% of sales and it has now moved through to 12% to 13%.

"Everybody is now getting comfortable and using MI New Home and we are already getting 10% of volumes coming through."

Mr Fairburn, who will take over as Persimmon chief executive this year, said the company does not expect any large upswing in the property market outside of London in 2013.

He said: "We are seeing a good start to the year and the signs are promising as our forward sales position is 9% ahead.

"We see a similar pattern across [the UK] except for more London centric property. We have good interest right across the schemes we have got.

"In Scotland we reviewed our offering and house types and tried to cover a bit lower down the market and provide more affordability.

"We have seen a better start in [2013] Scotland [that across the UK] with sales rates up about 10% and that is largely down to the mix we are offering in terms of house types."

Keith Bowman, analyst at financial services company Hargreaves Lansdown, said: "Persimmon has delivered strong progress, with the performance underwritten by highly supportive government measures. Initiatives to encourage first time buyers are clearly playing their part, whilst the Government's Funding for Lending scheme does appear to be easing the problem of mortgage availability.

"Like rivals, Persimmon continues to court new land in the south of the country, a factor which could raise prices, whilst recent weakness in the pound may eventually heighten raw material prices such as timber.

"Nonetheless, progress continues to be made."

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