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05/01/2012

Persimmon To Provide Early Housing Market Update

The City will be looking for signs of life in the housing market and any evidence first time buyers are re-entering the market when Persimmon provides an update on January 9.

In Persimmon's last interim management statement, the group reported that visits from first-time buyers between July 1 and November 7 were 35% up on a year ago. However, with the mortgage market still restricted and concerns persisting over the ability of first time buyers to find a mortgage, sales over this period were running just 4% ahead of the preceding period.

So analysts will be looking for any indications that initiatives such as the Government sponsored FirstBuy shared equity scheme are turning visits into sales over the more recent period.

With turnover of £1,570 million in 2010, Persimmon was the third biggest housebuilder gauged by revenue - behind Barratt in first place and Taylor Wimpey in second. However, in terms of pre-exceptional profit Persimmon's last annual figures show a total of £124.1 million (more than double 2009), making the company one of the most profitable British house builders.

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Persimmon said it expects to push the underlying operating margin of 9% achieved at the half-way stage up higher, possibly into double digits.

In terms of homes planned, Glenigan's figures rank Persimmon third after submitting 82 detailed planning applications of 10 or more units during the 12 months to September 2011.

Although the number of units in these applications has edged up to 10,011 Persimmon has lost second place to Taylor Wimpey, which has plans for 10,474. The housebuilder proposing the most units in this period was Barratt with applications to build 10,771.

Persimmon is active in most parts of Britain and Glenigan's research shows that the group has more new homes planned than any other housebuilder in four of the 11 British regions in the year to September 2011. These are though, mostly less populated parts of the country.

Persimmon is top in East Anglia with proposals for 1,349 units (2010: 2,543), the North with plans for 1,038 homes (2010: 816) and Wales 648 homes (2010: 364). Even the South West where Persimmon's plans for 3,108 units (2010: 1,638) make the group the most active housebuilder, is not a major population centre.

The South East is typically Britain's largest provider of new homes but Persimmon's total has shrunk over the last year to 1,381 (2010: 2,147). The group is again ranked third behind Barratt and Taylor Wimpey, whose planning programmes have expanded significantly over the past year to 3,825 units (2010: 2,462) and 3,324 homes (2010: 1,247) respectively.

Persimmon has retreated from London, which is the only region that the group does not feature among the top 10 housebuilders in planning activity. A year ago, Persimmon was ranked eighth in London in terms of planning activity but the latest programme of homes planned totalling just 35 units leaves the group ranked just 27th.

Elsewhere, Persimmon is ranked second in the West Midlands with submissions for 811 homes (2010: 468). The group is also sixth in both the East Midlands and the North West with proposals for 418 homes (2010: 359) and 328 units (2010: 588) respectively. (CD/DW)

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