U.K. State Aid Won’t Cut Home Shortage in 2011, Persimmon Says
The U.K. government’s 250 million- pound ($414 million) effort to aid homebuyers will have little impact on the market this year, prolonging the country’s housing shortage, Persimmon Plc (PSN) said.
The U.K.’s third-largest homebuilder expects 2011 sales to be little changed from the 9,400 units it sold last year as banks show little inclination to increase mortgage lending, Chief Executive Officer Mike Farley said today.
“The chance for us to massively improve this year will be muted,” he said in a telephone interview. “The benefit will be for 2012 and onwards.”
Britain faces a shortage of about 1 million homes by 2015, with London worst hit, according to Savills Plc, the U.K.’s largest publicly traded property broker. Developers say their sales are suffering as mortgage restrictions make it easier for first-time buyers to purchase existing homes than new ones.
Taylor Wimpey Plc (TW/), the U.K.’s second-largest homebuilder, expects a “relatively flat” housing market this year, the company said in a statement today.
Prime Minister David Cameron’s government plans to help 10,000 first-time homebuyers get cheaper mortgages by offering an interest-free loan of 20 percent of a home’s value for five years, split with the developer.
Persimmon could build an extra 2,500 homes if the company matches the share it took of the HomeBuy Direct loan program offered by the previous government, Farley said.
“If you look at HomeBuy Direct, which is very similar, Persimmon was one of the larger users of that,” Farley said. “We had a 25 percent share of that overall market.”
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