British housebuilder Persimmon posted lower first-half results today but signalled that further writedowns were unlikely, and its positive comments on price stabilisation added support to growing confidence in the sector.
The York-based housebuilder, one of the country's largest by market value, echoed signs of improved activity in the housing market in recent months, supporting evidence that the UK economy may emerge from the recession this year.
Persimmon said it expects sales rates to remain robust, based on low stock levels and good demand for new homes.
Nonetheless, Persimmon's CEO warned that a lack of higher loan-to-value mortgages continues to dampen growth in the sector, echoing comments from other builders.
"We're encouraged by what's happened so far, but it is too early too call (the bottom of the market) ... These are good positive indicators, but mortgage availability is key to our industry, and although it has increased, it is still from a very low base," said chief executive Mike Farley.
The group posted a pre-tax profit of £9.8 million for the six months to the end of June, compared with £36.9 million last year, broadly in line with expectations.
This includes an exceptional release of £27.9 million, it added, due to land writedowns at the start of the year being too conservative, signalling an end to further writedowns. The company reported a pretax loss of £18.1 million before tax and exceptionals.
Shares in Persimmon were 0.68 per cent higher in early trading this morning, rising to a 15-month high of 522 pence.
Reuters