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Fall in demand for new-build homes

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by Gill Montia

One of the UK’s largest housebuilders, Persimmon, has reported a sharp fall in demand for new homes.

The company’s forward order book has fallen 19% on this time last year, to £1.05 billion compared with £1.3 billion.

The number of people visiting its development sites has fallen 13% on last year, while cancellations have risen 20% on 2007.

However, the figures are an improvement on December, when potential buyers were particularly nervous because banks and building societies began to seriously tighten their lending criteria.

Persimmon chairman, John White, comments: “When confidence returns and sentiment improves we anticipate a return to a stronger market. In the meantime we remain cautious. Understandably, potential purchasers are currently taking longer to make decisions about the timing of their house purchase. There remains an underlying demand and desire for new homes but we have been experiencing a period of a ‘wait and see’ approach.”

Persimmon’s profit rose 1% in 2007, to £585.1 million. The number of homes sold fell 5%, to 15,905, but the average selling price increased from £188,129 in 2006, to £189,558 in 2007.

Meanwhile, investment bank, Dresdner Kleinwort, is predicting more grim news from the housebuilding sector: Barratt Developments and Redrow both report their results this week.

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News posted: February 26, 2008

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