Outlook is still gloomy

FOR?the most part, investors don’t like surprises. But Persimmon’s decision to reinstate its dividend at 3p, which came as something of a bolt from the blue, will be welcomed by shareholders. Although analysts were prepared for the housebuilder to swing back into the black, most thought the dividend would make a comeback at a later date, probably in 2011. Management clearly felt the business was making enough progress to act early. As a bellwether stock for the rest of the housebuilders, yesterday’s numbers should have inspired confidence.

But the cautious tone on the outlook suggests this is something of a false dawn. With data pointing to another fall in house prices before the end of the year, the property sector is bracing itself for a double dip. Although Persimmon will be better placed to weather the storm this time, having paid down its debt pile to £122m, the austerity measures planned for the Autumn will surely affect housebuyers.

That’s why Persimmon should ready itself for a sharp reduction in sales, and start focusing on margins not volumes. Shareholders should thank their lucky stars that the housebulder reinstated the dividend early.?If it had waited until 2011, it might have thought twice.