Persimmon warns housing market downturn gathering pace

Permalink: Persimmon warns housing market downturn gathering pace
by Kay Murchie

One of Britain’s leading housebuilders, Persimmon, is to write-off £600 million (19%) of the value of its land.

Furthermore, the company, which is based in York, warned that as house prices continue to fall, it expects a 10% fall in the selling price of its new homes for the latter-half of this year - twice the 5% it forecasted previously.

The housebuilder said that around 40% of people who had placed deposits on homes had cancelled as house prices continue to fall and the shortage of mortgages continued to have an impact on the property market.

Since reporting interim results on 21 August, Persimmon said it had experienced worsening trading conditions.

The company said the uncertainty created in the housing market by the increasingly turbulent and uncertain outlook in financial markets has had a negative impact on all its UK regions.

However, the group did give some positive news that targets to increase social housing sales by 25% this year were on track.

In related news, the Centre for Economics and Business Research (CEBR) today has predicted that house prices will fall in value by 25% from their peak. The organisation believes that house prices will not recover to the levels they peaked at in 2007 until 2013.

Meanwhile, the housing market downturn has claimed another victim after David McLean Holdings Ltd has been placed in administration.

The building company, which is based in Flintshire, employs 320 people and has offices in Cardiff and Shrewsbury.