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Persimmon postpones start of scheduled new sites

Persimmon has postponed the commencement of scheduled new sites until the mortgage market improves.

The announcement comes as the house builder revealed, ahead of its annual meeting, its sales volumes were down 18 per cent so far this year as demand for new properties weakened.

It says: “Because of the uncertainties of the global economy and the UK lending environment it is difficult to predict when the market will improve. We are therefore focussing on management of cash flows within the business to ensure that our balance sheet strength is maintained.”

Assetz chief executive Stuart Law says: “Today’s announcement has come as no surprise and only supports what I have been saying since last September, developers are not starting work on new sites in the current climate. Persimmon is not the first and it will by no means be the last to announce a freeze on new starts, today’s announcement is likely to be the first in a series of similar admissions across the housebuilding industry.
 
“With the number of new build properties set to decrease over the short term, we are effectively moving away, rather than towards Government’s overly ambitious targets of achieving three million new homes by 2020, this will ultimately support house prices and lead to renewed growth in due course.”
 
Law says the level of house building reductions is still to become clear but points out that a 40 per cent reduction to 96,000 new housing starts for both 2008 and 2009 is feasible based upon present evidence.
 
“However, I expect the most likely outcome will be around 110,000 new homes being built for each of these years.”

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