Persimmon and Bovis see demand rise

TWO of the UK’s biggest housebuilders yesterday reported a boost in demand as the sector picked-up with first time buyers helping to lift the gloom.

Persimmon said the number of first-time buyers has risen by over 35 per cent since the same period last year, a welcome boost to the industry that has seen first-time buyers frozen out of the market by high-deposit requirements.

The largest UK housebuilder by market value said visitor levels and prices remained firm, while cancellation rates were at historically low levels, echoing comments from peers of a stable market.

Persimmon said weekly private sales rates from the start of September were 19 per cent higher than a year ago, and it is fully sold for the year, with £460m of sales already reserved beyond 2011. It added it is confident of delivering further margin improvement in the second half.

However it said that the average selling price for the full-year will be slightly lower than last year due to the rise in number of first time buyers, aided by the government’s FirstBuy shared equity scheme.

Meanwhile rival Bovis Homes said it is on track for double-digit margin growth and reported a 29 per cent lift in reservations since August thanks to a rise in the number of sales outlets. The housebuilder, which said it is trading in line with its expectations, said visitor levels rose 40 per cent in the 10 week period from the end-August. It posted a sales rate per site per week of 0.49 compared with 0.45 in the same period last year.

Bovis said continued cost cutting will push its full-year operating margin up to 10 per cent. The group, which has opened 29 new sales outlets since the start of year, added it is confident of delivering an increase in return on capital of nearly five per cent in 2011, and at least seven per cent in 2012.