Persimmon’s cancellation rates soar

| October 28, 2008
Persimmon's cancellation rates soar

Persimmon has reported that its cancellation rates have risen to 35%.

In an interim statement, the housing developer said that the number of potential buyers who put down deposits of up to £700 on new homes and later withdraw, is now around 20% higher than its pre credit crisis average.

Describing trading conditions as having deteriorated since August, the firm referred to the uncertainty created in the housing market by turbulent financial markets, adding that the housebuilding sector has become extremely competitive, with many developers now offering substantial incentives to shift stock.

As a result, the sector is seeing a rise in marketing costs and margins are increasingly under pressure.

The builder also revealed that the downturn in the UK property market has meant that its land bank has lost 19% of its value, resulting in a writedown of around £600 million.

The company does not expect any improvement in sales of its houses until the Government’s scheme to rescue UK banks and restore mortgage lending has taken effect.

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