Persimmon says government scheme is boosting enquiries

Kasmira Jefford
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PERSIMMON yesterday said it enjoyed a strong start to the year, with the government’s NewBuy scheme helping boost demand during the spring selling season.

The housebuilder, whose brands include Charles Church and Westbury, said it continued to outperform, with visitor levels to its sites over the first 15 weeks of 2012 up 10 per cent on last year.

It said weekly private sales had continued to run ahead of the same period last year, increasing by 20 per cent in the period while its order book rose nine per cent to £1.24bn.

The NewBuy scheme – which allows lenders to provide 95 per cent mortgages on new build properties with guarantees from the government and developers – boosted enquiries from potential buyers, Persimmon said.

“We believe this scheme will support increased sales activity for the UK housebuilding industry once all the major mortgage lenders have entered the market, and made NewBuy widely available at attractive rates,” the group added.

However, analysts fear that Persimmon may be too bullish on the uptake of NewBuy.

Alastair Stewart, an analyst at Canaccord Genuity said: “We remain bearish on the sector and are seeing mounting evidence to support our case that the banking industry is cautious on mortgage lending in general and especially so on NewBuy.”

Nationwide, Barclays, Halifax and NatWest have started offering products under the NewBuy scheme, while Santander has said it will also start providing products under the scheme by the middle of the year.

Peel Hunt analyst Robin Hardy said NewBuy “was failing to ignite interest, with lenders clearly pricing the product high to deter interest.”

In February, the group promised to return £1.9bn of surplus cash to them over the next decade.

Chairman Nicholas Wrigley told the company annual meeting at York Racecourse: “Whilst the availability of mortgage credit remains the key constraint on the UK housing market, we remain confident that Persimmon can operate successfully within existing market conditions.”

Shares rose 2.4 per cent to 6.05p.