Oct. 27 (Bloomberg) -- Persimmon Plc, the U.K.'s biggest homebuilder by market value, said second-half prices will fall twice as fast as predicted earlier and the value of its land will be cut by 600 million pounds ($938.9 million).

Management is budgeting for a 10 percent slide in prices, the York, England-based company said in a statement today. The provision for lower land values, equal to 19 percent of the total value of holdings, will be booked in the second half.

``September was a momentous month and the most serious ever experienced in this global financial crisis,'' Chief Financial Officer Michael Killoran said today in an interview. ``Major institutions were going to the wall, and the knock-on effects have impacted us.''

Persimmon brought forward its business update by three weeks following a further plunge in selling prices, the company said. Chief Executive Officer Mike Farley has closed three offices and cut 1,100 jobs as surveys showed U.K. property values dropping the most in at least a quarter of a century. Output will tumble to 10,000 homes this year, with 25 percent coming from state contracts. That's down from 17,000 units.

The British homebuilder gained 4.6 percent to 227.25 pence in London trading. Rival Barratt Developments Plc closed down 2.5 percent at 49.25 pence after gaining as much as 11 percent earlier in the day.

Persimmon said it's operating within loan conditions, with cash generation in line with targets. The company will probably renegotiate its banking covenants in the first half of 2009, seeking a deal more closely related to cash flow than earnings, where the company has ``less control,'' Killoran said.

Sales for this year including legal completions total about 1.8 billion pounds, with about 250 million pounds of sales booked for 2009.

Record U.K. Writedown

Persimmon's writedowns are the biggest booked by any of the country's housebuilders during the current slump. Taylor Wimpey Plc, Britain's No. 1, in August cut its U.K. land bank by 585.9 million pounds. Including its U.S. and Spanish provisions, writedowns totaled 690 million pounds.

Cancellation rates at Persimmon have increased to about 35 percent as customers are less willing to part with their cash amid the financial crisis and may believe prices will fall further. Visitor levels are down about 22 percent compared with a year ago, Killoran said.

The company has maintained its sales rate by volume since April by lowering prices, CEO Farley said on a conference call. Persimmon expects to open about 40 new sites for sale in the second-half.

The U.K. government will provide as much as 250 billion pounds of loan guarantees to help refinance debt and unlock seized capital markets. It intends to restore mortgage lending to 2007 levels, after it more than halved in 2008.

Like rivals, Persimmon is turning to social housing for low-income families, a steadier market supported by government funding. The purchase of rival Westbury Plc in 2006 placed Persimmon well in the social housing field, Farley said.

To contact the reporter on this story: Tim Barwell in London on tbarwell@bloomberg.net

Last Updated: October 27, 2008 12:47 EDT