adminof severe economic uncertainties.
Persimmon Plc, Britain’s largest volume housebuilder, yesterday said it expects a recovery in sales in the second half of the year, after private sales reservations rose 6 percent year-on-year in the past 10 weeks.
“We’ve seen a fairly stable market, and we’ve seen a continuation of improvement of our level of sales since the start of the year,” Persimmon Chief Executive Mike Farley told Reuters.
The comments came as construction group Morgan Sindall confirmed a “slight improvement” in market conditions and positive trading in affordable housing, while Galliford Try reported annual housing completions up 27 percent to 2 170 units.
Analysts say a chronic lack of housing in the UK would continue to act as an underlying prop to housebuilders and the housing market.
“Historically low interest rates, a marginal improvement in mortgage availability and the still-constrained supply of second-hand homes for sale have all enabled Persimmon to advance its own recovery,” said Keith
Bowman at brokerage Hargreaves Lansdown.
Last week, rival Taylor Wimpey reported stronger margins and said it expected analysts to raise their full-year profit forecasts for the company. But tight credit conditions remain a thorn in the side of an industry that has seen housing output in the UK shrink to record lows, prompting lenders and housebuilders to get together to thrash out solutions.
“The discussions are at any early stage, but the good thing about it, is that it’s been recognised by the lenders, that it’s a 95 loan-to-value (LTV) product that is required,” said Farley.
“The difference now is that there is a genuine will from the lenders to come up with a solution to this issue.”
The Home Builders Federation said the only viable long-term answer had to involve insurers underwriting loans to first-time buyers, rather than the latter having to put down hefty deposits. Lenders were showing little appetite to loosen their purse strings due to regulatory constraints on what they can lend.
But there is some hope for the housebuilding industry, with a number of government initiatives announced in recent months and a slight improvement in product availability.
“We have seen on the ground that there has been some marginal improvement in availability of mortgages, particularly higher LTVs,” said Farley.
Persimmon said it continued look to higher profitability.
“Our focus remains improving our margins, at 9 percent we still have a way to go,” said Farley, after underlying operating margins crept higher from 8 percent last year in the first half. – Reuters.
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