Persimmon confident despite market constraints

House builder Persimmon said the UK housing market continues to be challenging and mortgage availability remains the key constraint however it is still confident about future growth.

"With the adoption of our new Long Term Strategy at the start of the year we remain confident of the future successful growth of Persimmon," the group said in a company statement.

The group's weekly private sales rate is around 4% higher on the previous year, but down slightly from 5% as reported in its half year results at the end of August.

Visitor levels to its sites have been roughly 6% ahead of last year from the start of the autumn season and cancellation rates continue to run at historically low levels of around 20%.

Persimmon also highlighted that the cost of mortgage loans has recently reduced slightly as lenders access the Government's Funding for Lending Scheme.

The group re-iterated that it expects the group to return to underlying operating margins within the range of 15% to 17% in the medium term.

"We are confident that the second half of 2012 will demonstrate further good progress along that path, building upon the improvement to 12.2% secured in the first six months of the year," it added.

Return on capital employed will continue to increase, as it continues its tight control over development costs.

The group, which acquired over 5,500 plots since 1 July, including 1,600 plots in the South East, said it expects to hold an increased level of cash at the close of the year compared to £135.2m at the end of June, following strong free cash generated by its operations.

CJ