Persimmon confident in housing markets long term future with 2010’s forward sales 40% ahead of last year

Homebuilder Persimmon (LSE: PSN) re-affirmed its confidence in the long term future of the UK housing market. In a trading update ahead of reporing results for the year ended 31 December 2009, Persimmon revealed turnover of approximately £1.4 billion from the completion of 8,976 new home sales, with an improving sales performance in the second half.

The company anticipates a good start to the year, with forward sales into 2010 approximately 40% ahead of last year at £640 million. On the London Stock Exchange Persimmon climbed nearly 2%, trading at 478p in early deals.

The FTSE250 builder said it has concentrated on cash generation following the very challenging market conditions since April 2008. Persimmon has focused on working capital management and strict cash control discipline. Accordingly the company has achieved significant debt reduction, from £1.2 billion in April 2008 to approximately £270 million at 31 December 2009.

Persimmon has benefited from a number of government lead schemes to help the housing recovery, in November the group reported the 1,000th completed sale under the HomeBuy Direct scheme. The homebuilder said it has approximately £4.5 million left to utilise under the scheme, representing the sale of up to 2,500 homes.

HomeBuy Direct is a shared equity scheme designed to help first-time buyers through home-equity tied loans which are subsequently used for mortgage deposits. The equity loans can be up to 30% of the purchase price and are co-funded by government and the developer.

Furthermore Persimmon is set to receive further government aid through the second round of the Kickstart Housing Delivery programme, which targets currently stalled sites and developments. The Homes & Communities Agency has awarded an additional £50 million specifically to support potential purchasers of Persimmon homes under the HomeBuy Direct process. According to the company, Kickstart 2 will provide assistance for approx 3,000 homes on 40 Persimmon developments across England up until 2012.

Whilst remaining cautious in terms of mortgage availability and the general economy, Persimmon said it has continued confidence in the long term future of the UK housing market.  http://www.proactiveinvestors.co.uk/companies/news/11918/persimmon-confident-in-housing-markets-long-term-future-with-2010s-forward-sales-40-ahead-of-last-year-11918.html