UK Property Market Finally Stabilises - Persimmon

Another sign of the stabilisation of Britain's property market came as the largest UK housebuilder Persimmon, claimed that the value of its land bank increased. Even though the company's financial report said that its pre-tax profits and revenues fell by 73% and 39% accordingly, the fact that Persimmon declared a significant rise of £27.9 million in its land value means that the housebuilder was left with £1.7 billion in value. It was also the restructuring, which Persimmon undertook last year, that allowed the company to cut its operating expenses by as much as £6.5 million a month; this move helped Persimmon to generate savings of £50 million in 1 year. Let us remind that in 2008, Persimmon was significantly influenced by decreased rate of mortgage approvals coupled with declined consumer confidence and market activity, which made the company write down the value of its land bank to £652 million. However, in the first 2 quarters of 2009 market activity as well as property values started to stabilise and even to go uphill. Persimmons managed to sell an average of 4,000 houses in the first half of 2009 alone; moreover, the company has seen a 9% increase in the number of property reservations, which brought the figure to £910 million. The company's business was also supported by growing selling prices with an average house price hitting £174,000 lately, a dramatic increase of 6% compared to the same time last year. Chairman of the housebuilding company, Mr. John White, is determined that the level of sales in the UK is to remain stable because the property industry has seen both: de-stocking and growing demand for property. He added, however, that the company does not fool itself with increases in property values that recently occurred almost all over the mainland Britain, as it clearly understands that the future of the market is closely linked to employment opportunities, mortgage availability and overall health of the British economy.