Mortgage shortage slows housing

Published:  16 November, 2010

YORK: Persimmon, one of the UK's biggest housebuilders warned yesterday that a lack of mortgage finance, especially for first-time buyers, is depressing housebuilding activity.

Alongside an update for Persimmon for the period from 1 July-15 November, Mike Farley the company's chief executive warned that a lack of available mortgages remained a "major obstacle" to potential buyers.

Mr Farley said the company "did not experience the normal autumn increase in visitor levels and reservations", although weekly sales grew gradually in September. More specifically, reservations fell by about 15% between 1 September and the Government's Comprehensive Spending Review on 20 October, but had "picked up since then".

Persimmon's comments follow those of Steve Morgan, chairman of the rival housebuilder Redrow, who said earlier this month: "as a direct consequence of this worsening mortgage famine, the average age of an unassisted first-time buyer is now 37 and rising". According to the Halifax index, house prices rose by 1.8% in October, but they are down by 1.2% over the last three months.

Mr Farley said: "We are seeing very stable prices."

Persimmon said that current trading was in line with expectations and reaffirmed that it expected to double its operating margin to about 8% for the year to 31 December. The company added that it was on track to complete about 9400 homes during the period, 5% more than it did in the same months last year.

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