East Anglia: Persimmon Homes to step up construction after 40% jump in first half profits
- Credit: Archant
National housebuilder Persimmon today pledged to step up construction to meet soaring buyer demand after Government schemes to boost the market contributed to a 40% jump in the group’s first half profits.
Persimmon, which also includes the Charles Church and Westbury Partnerships brands, said more than 1,700 reservations had been made under Help to Buy since its launch in April, allowing those with only a 5% deposit to buy new-build homes.
Underlying pre-tax profits for the first half of the year jumped to £135.3million. from £96.9m a year earlier, with legal completions rising 7% and forward sales increasing by more than a fifth.
Persimmon added that it expected demand from home buyers to continue picking up over the coming weeks and months as the housing market recovery gathers pace.
It vowed to increase home building activity, with plans to open another 85 sites by the end of the year, adding to 390 sites already under construction.
The company said: “The group is working hard to increase production in response to the improved demand evident in all our regional markets.
“To deliver the volume to meet this increased demand, we are maintaining our strong investment in land and stepping up our investment in construction,” the group added.
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It is the latest builder to confirm a sharp increase in profits thanks to improved access to mortgages and the Help to Buy scheme after Bovis Homes yesterday reported a 19% rise in interim pre-tax profits.
Help to Buy has been boosting new build take-up, while the programme is also being extended next year to existing homes.
Mortgage availability has likewise been helped by state initiatives, primarily the Bank of England and Treasury’s Funding for Lending scheme, which provides cheap credit to lenders in exchange for them providing mortgages as well as small business financing.
However, there are fears that Help to Buy in particular could lead to a housing market bubble and critics have been calling for a clear end date to be set for the scheme.
Persimmon, a recent entrant to the FTSE 100 index, has seen reservations jump by 30% since Help to Buy was introduced in April.
It said overall selling prices had remained stable in the first half, but that private reservation prices had risen by 5% to an average £179,199.
The group’s current developments in the East of England include sites in Ipswich, Colchester, Hadleigh, Braintree, Chelmsford, Saffron Walden, Bures and Diss.
Andrew Fuller, managing director for Persimmon Homes Anglia, said the company’s regional arm had contributed strongly to the first-half performance.
“We are working hard to deliver new homes to people across the region, whether this is private housing through our brands Persimmon Homes and Charles Church or affordable homes through Westbury Partnerships,” he said.
“In the first half of this year we successfully opened 90 new sites and expect to open a further 85 before the end of the year, with new developments due in Norwich, Diss, Clare, Harleston, Brundall and Aylsham.
He added: “To meet the ever-increasing demand for quality new homes, the company continues to make significant investments in strategic land. During the first six months of the year the business acquired 7,538 new plots of land and added a further 800 acres of strategic land to underpin our ability to deliver new homes in the future.
“We remain committed to working closely with local communities to deliver excellent new sites in desirable locations, starting construction at these sites as soon as they achieve an implementable detailed planning consent.”
In addition to its investment in land, Persimmon is looking to create more jobs across its 24 businesses around the UK. It recently announced a national recruitment drive to encourage more than 100 trade apprentices to join the business and there is also a corresponding programme of new hires in technical, managerial and sales functions across the company.
Mr Fuller added: “As a region, we are delighted with the group’s performance and I would like to thank my own team for their hard work in helping to deliver these results.
“Our attention now turns to the second half of this year as we continue to focus on the basics of good housebuilding to deliver further improvement in the performance of the business.”