Persimmon expects house prices to rise lol

Loughton_Monkey

Great news! Persimmon expect house prices to go up! Wonderful. More news hot off the press:

• Turkeys expect 2011 will be the year of the Christmas goose.
• HL expect more people to invest in SIPPs.
• BDA expect thousands more to go privately to dentists.
• BMW expect more people to buy 'quality' cars more than cheap Kia's.
• Thompson expect more people to go abroad this year.

........

I wonder if they have recently looked at the thickness of two short planks lately, or whether some of their lorries have been found to be a brick or two short of a load?

Cleaver

I've found the original news release from this company and I can't see any mention that they expect house prices, in general, to rise this year. Here's the link to the news release and I've quoted it in full below.

http://corporate.persimmonhomes.com/psn/investor/rns/rnsitem?id=4336358&t=popup

All I can see is that they have a number of orders in the second half of the year for more detached houses, so they see the average house sale price within their company to be higher than the first half of the year. That's not really news.

If this press release is all the company released then the BBC's headline is very misleading, as Persimmon aren't saying anywhere that UK hosue prices will rise.

TRADING UPDATE

TUESDAY 5 JULY 2011


Persimmon plc announces the following update ahead of its Half Year Results to 30 June 2011, which will be released on Tuesday 23 August 2011.

Market conditions during the first half of the year have been stable allowing the business to focus on delivering improved operating margins, generating good levels of free cash flow and successfully securing residential consents on a number of strategic land parcels.

During the first six months of 2011 we have legally completed 4,439 homes (2010: 4,657) with sales improving from the lower sales order book at the start of the year. As previously indicated we anticipate delivering a similar number of legal completions this year as in 2010, with an increase in volume in the second half over the prior year. Turnover for the first six months was c. £715 million. Sales rates continued to improve through the spring selling season. Since our Interim Management Statement in April the value of our private sales reservations is 6% higher than the same period last year. Our order book at 30 June 2011 is now ahead of the same point last year with forward sales at c. £725 million. This places us in a strong position for the second half.

We are currently selling new homes from c. 380 sites and healthy visitor levels demonstrate that underlying demand is resilient. We have successfully opened 70 new sites in the first half of the year and have identified a further c. 70 sites for sales release during the second half. Cancellation rates continue to run at a low level of c. 17%.

Underlying pricing remains firm for the year to date. Average selling price for the first half of the year was c. £162,000 (2010: £168,936) reflecting the legal completion of a greater proportion of smaller house types in the period. However, we anticipate that our average selling price for the full year will increase as we legally complete more detached house sales already included in our forward order book.

We anticipate underlying operating margins for the first half, before exceptional items and goodwill charges, will show further improvement to c. 9.0% (H1 2010: 8.0%).

Any meaningful increase in industry output will only occur with a significant improvement in the currently constrained mortgage lending conditions. We continue to see some modest improvement in mortgage lending with a greater number of higher loan to value products available in the market. We have been successful in securing c. £35 million of funding from the Government under their FirstBuy Scheme to support first time buyers in the market. We look forward to introducing this facility to our customers across the c. 290 sites where c. 2,100 new homes have been allocated support. Our customers have also been keen to take advantage of our part exchange facilities which provide a very convenient method for acquiring a newly built home.

We continue to invest in high quality land, which will support both the improvement in the Company's profitability over the medium term and an expansion in legal completions as and when market conditions allow. During the last six months we have acquired c. 7,500 plots of land, c. 36% of which have been secured through successfully converting strategic land positions. Notable successes have been c. 800 plots at Gatwick in the South East and c. 200 plots at Whinmoor in Leeds, West Yorkshire. These anchor sites will deliver superior returns for the business in the coming years.

At 30 June 2011 our borrowings were c. £15 million (June 2010: £122 million). As previously announced we arranged a new five year £300 million revolving credit facility during the first half of the year. The combination of our strong liquidity and these new facilities on improved terms will lead to lower finance costs in future periods, supporting further growth in profitability.

We continue to operate successfully in the current market and remain focussed on delivering further margin growth and free cash flow, supported by our strong high quality landbank.

Cleaver

doire wrote: »

A housebuilder thinks house prices will rise.....wow

As far as I can see, they haven't said that house prices will rise. They said that their average sale price in the second half of the year will be higher than their average sale price in the first half of the year, largely due to the fact that they have forward orders for more detached houses.

I think the BBC, and then Brit, just read too much in to their press release.

brit1234

Then the big question here is would any people here be happy to own building company shares at the moment?

Cleaver

brit1234 wrote: »

Then the big question here is would any people here be happy to own building company shares at the moment?

Depends on the building company. I'd be happy to consider buying shares in most companies, it just depends whether they meet my criteria. And I assume that other people will have different criteria to me. Obviously most people on here wouldn't buy building company shares as they are very bearish about the housing market in general.

In terms of Persimmon, their shares hit a low in late 2008 and have risen fairly solidly since then. If you'd bought shares in them two and a half years ago you'd be sitting on a 100% profit right now, but then hindsight is a wonderful thing.

By the way, looks like the market reacted very neutrally to their news release yesterday, with their price down just 0.28%.

System

Cleaver wrote: »

As far as I can see, they haven't said that house prices will rise. They said that their average sale price in the second half of the year will be higher than their average sale price in the first half of the year, largely due to the fact that they have forward orders for more detached houses.

I think the BBC, and then Brit, just read too much in to their press release.

The people on this thread know full well what persimmon are actually saying. I don't know where you get the patience to constantly correct people who are being wrong in purpose, I took one look at the OP and really couldnt be bothered.

Rinoa

Tuesday:
MSE bears laugh off persimmon's claim that house prices will rise.

Wednesday:
Halifax report house prices rising 1.2% in June.

Pete111

Rinoa wrote: »

Tuesday:
MSE bears laugh off persimmon's claim that house prices will rise.

Wednesday:
Halifax report house prices rising 1.2% in June.

Yes but those rises are only in the North.

Graham_Devon

Rinoa wrote: »

Tuesday:
MSE bears laugh off persimmon's claim that house prices will rise.

Wednesday:
Halifax report house prices rising 1.2% in June.

Thought they didn't claim it?

ess0two

brit1234 wrote: »

Then the big question here is would any people here be happy to own building company shares at the moment?

How are your're Kleenex shares.