Housebuilder Persimmon shuts new sites

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by Kay Murchie

Housebuilder Persimmon has announced it is to stop building on new sites until market conditions improve, which could result in tens of thousands of job losses.

The country’s biggest housebuilder by market value and No.3 by homes built said sales in the first four months of 2008 had declined 24%.

Traditionally, April is the busiest time for house builders but Persimmon said that in the last 3 weeks it had experienced lower sales volumes and increased cancellation rates.

Chief executive, Mike Farley, blamed the fall on unprecedented conditions in the mortgage market and urged the Government to scrap stamp duty for purchases under £250,000 for all first-time buyers for at least a year.

Mr Farley added it is entirely possible the industry could build only 110,000 homes or less this year.

Shares in the housebuilder fell 6% following the news.

According to building industry sources, the Northern and Yorkshire regions had already experienced job losses.

Many contractors believe the downturn could be worse than the early 1990s slump. When half a million construction workers were laid off between 1989 and 1994.

Last month, the housebuilder said the numbers of visitors to its show homes this year is improving but converting those to sales ‘remained challenging’.

Last year, Persimmon completed 15,905 homes, down 4.8%, while average selling prices increased 1% £189,558.

In January 2006, Persimmon acquired UK housebuilder Westbury plc for a consideration of £643 million.