Page last updated at 11:19 GMT, Friday, 25 April 2008 12:19 UK

Mortgage crunch hurts developer

Housing development built by Persimmon
Persimmon said cancellation rates had increased in recent weeks

The squeeze in the mortgage market has hit trading at leading housebuilder Persimmon, whose sales are down by nearly a fifth so far this year.

The firm said housing market activity had "deteriorated" significantly in the past three weeks as mortgages became scarcer and consumer confidence fell.

It was "difficult" to say when things would improve and more support was needed for first-time buyers, it said.

Persimmon shares fell 41.5 pence, 6.4%, to finish at 608.5 pence in London.

Earlier in the day the shares slumped as low as 589.5 pence - the lowest level for 12 months.

'Uncertainties'

Sales volumes were down 18% so far this year, Persimmon reported ahead of its annual meeting, as demand for new properties weakened.

Lower demand meant Persimmon had to offer more discounts and spend more on marketing, in turn hitting its financial performance.

Because of the uncertainties in the global economy and the UK lending environment, it is difficult to predict when the market will improve
Persimmon statement

Its revenues were affected, falling 24% to 1.37bn over the period from 1 January.

The firm said it expected market conditions to become "more challenging" as would-be homebuyers struggled to gain access to finance.

"Because of the uncertainties in the global economy and the UK lending environment, it is difficult to predict when the market will improve," the firm said.

But it added that the picture would improve "at some stage" given the underlying demand for more housing in the UK.

Ministers have urged lenders to pass on the Bank of England rate cuts in full to stimulate activity.




SEE ALSO
House builder 'cautious' on 2008
26 Feb 08 |  Business
Barratt upbeat on housing outlook
27 Feb 08 |  Business
Persimmon upbeat but sales slide
09 Jan 08 |  Business

RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites


FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC navigation

BBC © 2013 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific