Falling sales prompt housebuilder to call for government boost to housing market

Persimmon has put a freeze on new developments until the mortgage market picks up.

In a trading update this morning, the housebuilder said the decision was taken against the backdrop of a 24% fall in sales revenue in the first few months of 2008, from 拢1.8bn to 拢1.37bn, and a 18% drop in sales volumes.

It said: 鈥淐lose control of investments in work in progress, land, build costs and overheads are a priority. We are currently operating off about 5% more sites than a year ago. Against that backdrop we have postponed the commencement of scheduled new sites until the mortgage market improves.鈥�

Persimmon made an appeal to the government to 鈥渦rgently consider additional action to benefit first time buyers鈥� by reducing interest rates further and increasing the threshold for stamp duty.

It warned that the market is set to become 鈥渕ore challenging鈥� in the rest of the year.

Kaupthing analyst Kevin Cammack said that the announcement shows the group 鈥渇alling into line with competitor comments on the state of the market鈥�.

Despite what he called a 鈥渞obust balance sheet鈥�, Cammack said of Persimmon: 鈥淚ts comments are every bit as negative as we had feared, perhaps a touch more so with the group seeming to have thrown in the towel on hopes of any second-half improvement and now reduced to pleading for government help.鈥�

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