Persimmon hopes for mortgage lending improvement

5th Jul 2011 07:21

Mortgage lending conditions must improve before there can be any meaningful increase in industry output, the housebuilder Persimmon said as it reported lower sales and house prices this year.The company said it had seen improved margins and good levels of free cash flow, while managing to secure some strategic land parcels for future home building.Persimmon completed the sale of 4,439 homes in the first six months of 2011, down from 4,657 over the same period the previous year, but expects volumes to pick up in the second half of the year, resulting in a similar number of completions as in 2010.Sales improved as the year progressed, said the company, which reported turnover of about £715m for the first half. Average prices achieved fell to £162,000 from £168,936 in the same period the previous year, "reflecting the legal completion of a greater proportion of smaller house types in the period." This should improve in the second half when Persimmon starts selling more detached houses, the company said.Operating margins for the first half are expected to have improved to 9% from 8%."Any meaningful increase in industry output will only occur with a significant improvement in the currently constrained mortgage lending conditions," the company said. "We continue to see some modest improvement in mortgage lending with a greater number of higher loan to value products available in the market."