Persimmon Revenue Gains as Government Loans Lift Home Demand
Persimmon Plc (PSN), the U.K.’s largest homebuilder by market value, said first-half revenue climbed 12 percent as the government’s Help to Buy loan program lifted demand.
Revenue rose to about 900 million pounds ($1.4 billion) from 806.7 million pounds a year earlier, the York, England-based company said today in a statement. The operating margin widened to about 15 percent from 12.1 percent as prices rose, Persimmon said.
“There’s certainly more confidence in the market, which is being supported by more mortgage lending,” Chief Executive Officer Jeff Fairburn said in a telephone interview.
The Help to Buy program, introduced in March, offers loans of 20 percent of the value of a property worth as much as 600,000 pounds to buyers of new homes. The number of homes being reserved by Persimmon’s customers each week rose 30 percent since the program started compared with a year earlier, the company said. Most of these reservations resulted in sales.
Persimmon was down 1.3 percent at 1,224 pence at the 4:30 p.m. close of trading in London. The shares have gained 64 percent this year, the best performance in the Bloomberg EMEA Home Builders Index, which has risen 31 percent.
Persimmon’s average home selling price increased 5 percent to about 179,200 pounds in the first half, according to the statement. The company completed 5,022 homes during that time, 7 percent more than last year.
The government is underwriting mortgages and providing cheap funding to banks in an attempt to boost the economy through construction. Total gross mortgage lending in the U.K. rose about 20 percent in May from the previous month to 14.7 billion pounds, the most since October 2008, the Council of Mortgage Lenders said on June 20.
Persimmon said 1,124 of its customers reserved homes using Help to Buy.
The initiative “has generated interest in the market and it’s bought potential purchasers to site,” Fairburn said. “It has demonstrated to people that there is affordability out there and they do have the opportunity to buy.”
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