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Persimmon sees home reservations rise 15%

PERSIMMON has seen a 15.5% increase in home reservations in Scotland in the first half of the year with new-build house prices holding steady or improving.

BUILDING SUCCESS: Persimmon has enjoyed a huge rise in home reservations and hopes the scheme for new buyers will generate even more interest. Picture: Kirsty Anderson
BUILDING SUCCESS: Persimmon has enjoyed a huge rise in home reservations and hopes the scheme for new buyers will generate even more interest. Picture: Kirsty Anderson

The company is hopeful a Scottish Government-backed scheme offering 95% mortgages, tentatively titled MI New Home, will be formally announced soon to further boost demand.

Jeff Fairburn, group managing director and chief executive of Persimmon's north division, told The Herald the company was continuing to buy land around Scotland.

He said: "We have seen reservations up 15% year on year in Scotland, which is positive. We have been concentrating on buying more sites there and are pleased with our activities in the land market

"In the short term, the holiday season is now over and we have seen a very strong return to visitor levels over the past weekend.

"So, it is good indications in the market and we are happy with our position."

Mr Fairburn said prices at a development in Galashiels had risen 5% in the past six months while at Dumbarton increases have been between 2% and 3% depending on the property.

He expects any Scottish Government-backed mortgage initiative to encourage more people into the housing market.

He said: "There is good demand for the right types of houses in good quality locations. It is just making sure we can service the buyer from a mortgage perspective.

"I would hope that when MI New Home gets introduced in Scotland that it will generate more interest from first-time buyers although it covers the rest of the marketplace up to £250,000.

"We are keen that it gets under way and the expectation is something will be announced fairly soon."

Across the whole UK business legal completions increased 6% to 4712 with the average price up 7% at £171,000. The more upmarket Charles Church brand, which has around 25% of its sales in Scotland, reported a 30% rise in completions to 1123 with average selling price up 8% to £233,565 in the first six months of 2012.

The Persimmon Homes arm reported a 4% increase with 2838 completions with average prices 3% ahead at £171,703.

Affordable housing division Westbury Partnership delivered 751 homes, down 12%, with average prices 7% lower at £89,485.

Revenue grew 13% from £712.8m to £806.7m while pre-tax profits increased from £60.3m to £98.3m.

That means the company is on track with plans to pay a dividend of 75 pence per share in 2013 as part of its £1.9 billion return of cash over the next nine years.

There were 5779 new plots of land acquired across 50 sites bringing the total number of plots to 63,786 which is equivalent to more than six-and-a-half years of supply at the current level of sales.

The UK Government's NewBuy scheme, which encourages the return of 95% mortgages, had helped to sell 220 homes between January and June.

Around 20% of total private sales customers had used part exchange facilities with Persimmon's stock holding of these houses increasing from £36.4m to £47.3m.

Private reservations are said to have slowed since the 18% growth seen in the first half but are running 5% ahead year-on-year since the start of July.

Selling prices have remained stable while cancellation rates remain at historically low levels of around 18%.

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