Homebuyers are not too concerned by the 1% rise in interest rates since the election, housebuilder Persimmon said yesterday as it revealed it had doubled its profits in the first half of the year.
Persimmon, which started a busy week for the housing market, said it made a pre-tax profit of £23.3m in the six months to June 30, a 110% surge on the £11.1m it made in 1996.
The company said it was bullish about its future prospects. Chairman Duncan Davidson said: “The positive approach taken by the new Chancellor in his first Budget can only help our business if that approach is maintained. Despite relatively modest increases in interest rates, they remain at levels which our purchasers find acceptable.”
Gordon Brown raised Stamp Duty on property purchases and cut back the amount of tax relief available under MIRAS – but both moves were less than many commentators had feared.
He said the improved market in south-east England would gradually spread to other parts of the UK. Persimmon aims to maximise the profit it made on each plot rather than try to increase the volume of its sales.
In the first half of the year, pre-tax profit per unit rose to #7,300 from £4,100 while the cost of the average plot was virtually unchanged at £16,600.
Shareholders will receive a 6.7% increase in their dividend to 3.2p up from 3p, against earnings per share of 10.0p, 5.2p in 1996.
Further details of the housing market will be revealed tomorrow when Geoge Wimpey, the UK’s largest homebuilder, reports its half-year figures. The City expects the figures to reveal the scale of the recovery with operating profits rising to £20m from £2.7m.
Connolly Wilson is expected to show a £10m profit on sales of £125m when it reports on Wednesday, while the following day will see figures from Amec, the construction group that owns Fairclough Homes.
PA News 02/09/97
