Persimmon profits surge 57% on house price growth

Persimmon said it was encouraged by the number of sales made during the traditional summer slowdown

Housebuilder Persimmon has reported a surge in pre-tax profits for the six months to the end of June of £208.9m, compared with £132.9m a year earlier.

It is the second property developer in a week to report a big rise in profits as the housing market recovers on the back of the UK's economic growth.

New home sales rose 28% to 6,408, compared with 5,022 a year earlier.

Persimmon said that average selling prices were 4.3% higher at £186,970 compared with £179,199 a year ago.

Jeff Fairburn, group chief executive, said he was encouraged that sales and reservations since the beginning of July had remained around 9% higher than a year earlier despite the "traditionally slower summer trading weeks".

He said the results demonstrated Persimmon's ability to deliver on its objectives as part of a ten year plan launched in 2012.

On Monday, Bovis Homes reported a 150% rise in pre-tax profits to £49.4m in the six months to the end of June compared with £18.6m a year earlier.

Persimmon also reported a 33% increase in revenue in its first half to £1.2bn, from £900m a year earlier.

It said it anticipated starting work on 100 new development sites before the end of the year, with building work already up by 26% compared with the first six months of 2013.

The property developer also invested in 14,251 new building plots, taking its total to 82,250 compared with 70,716 in the same period a year ago.

House boom

Property values nationally increased by more than 10% in the year to July, according to the latest Halifax house price index, as government initiatives to make it easier to access mortgages, such as the Help to Buy scheme, took effect.

And earlier this month, a survey showed that UK housebuilding grew at its fastest rate in nearly 11 years in July.

The Markit UK Construction PMI report said home building grew at its steepest rate since November 2003, driven by strong demand for new projects.

Persimmon said it was "encouraged" by the return to growth in mortgage loan approvals in June, after several months in which the number of loans approved seemed to go into reverse as lenders grappled with new affordability rules introduced in April.

The company said that continued moderate growth in mortgage lending would support both first time buyers - which are considered crucial to growth in the market - and growth in the construction sector, which despite a surge in activity in the last year remains well below its pre-recession peak.