BRITISH HOUSEBUILDER Persimmon says volumes and forward orders are ahead of 2008 comparisons and it expects no more writedowns of the value of its land holdings, boosting shares in the sector yesterday.

Britain’s largest housebuilder by market value also said it had cut its debt by almost half in the past 12 months to £495 million (€574 million) at the end of June and that prices were stabilising in some locations.

“Persimmon’s update is raising hopes that the worst for the housebuilding sector may be over,” said Keith Bowman, analyst at Hargreaves Lansdown, adding that “a sense of perspective is still required” given the lack of mortgage availability.

His comments echoed those by the company’s management, which said it was seeing “historically low” cancellation rates.

Persimmon said completed house sales dropped 27 per cent to 4,006 houses in the six months to the end of June. Revenue fell 37 per cent to £625 million. In 2008, Persimmon completions fell 36 per cent, while revenue fell 42 per cent.

“We’re encouraged by the market; it’s still constrained by the mortgages but what we’ve seen is an increased volume and lower level of cancellation rates,” said Persimmon chief executive Mike Farley. Debt reduction was taking its toll on margins, which remained under pressure as the company focused on positioning itself for a recovery, he added.

The outlook for British housebuilders remains tough as a record low level of mortgage transactions continues to hamper momentum in the market, coupled with rising unemployment and the approach of the quieter summer period. The UK Council of Mortgage Lenders reported gross mortgage lending plummeted 58 per cent year-on-year in May to £10.3 billion.

Lenders have tightened borrowing conditions, demanding as much as 25 per cent of a home’s value as a deposit. – (Reuters)