No house price bubble here, says builder

Housebuilder Persimmon reported a strong first half and said it sees no sign of a housing bubble, playing down fears that the market could be overheating in some parts of the country.


The York-based builder said its Yorkshire operations performed well in the first half of 2014.

Chief executive Jeff Fairburn said: “We’re really pleased with our Yorkshire operations. There is very good demand. Some areas have suffered from a lack of new homes in York and Leeds, but now new sites are coming forward.

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“It’s great to see the planning system working better. People were being pushed out to villages, but now they can get closer to the centre where they want to be.”

He was speaking yesterday as the group reported a 33 ​ per cent​ leap in revenues to £1.2bn​ in the six months to June 30.

The FTSE 100 firm said completions rose 28 per cent to 6,408 new homes and the average selling price rose four per cent to £186,000.

Visitor numbers were five per cent ahead and cancellations remained at the low level of 16 per cent.

Mr Fairburn welcomed new measures announced by the Bank of England last week to make sure that only 15 per cent of a lender’s mortgage book can be offered to people who need to borrow 4.5 times their salary

“We welcome these new measures. We see them as very sensible,” he said.

“They will protect the mortgage market in the future.”

He added that he doesn’t see the need for any more measures to curb borrowing.

The Bank of England added that lenders should also apply a new stress test ensuring that borrowers can keep up their mortgage repayments in the event of a rise of up to three per cent in interest rates.

“This is future proofing,” said Mr Fairburn.

“I don’t think rates will increase by that much. It won’t have a material effect on people’s ability to buy.”

Persimmon has benefited from being a nationwide housebuilder with no exposure to central London, where house prices have stormed ahead. As a result it has not been hit by fears of a housing bubble.

“Our business is balanced,” said Mr Fairburn.

“We’re in the South East but not in central London. It’s not an issue of prices running away. I don’t see a housing bubble.”

He added that the group has seen no sign of a North-South divide.

“It’s really a question of individual locations. We make sure we’re in good locations,” said Mr Fairburn.

“We’ve got very strong sites and demand is very good. People want to live there.”

​Persimmon​ is set to start building new developments in Hull and Doncaster.

Simon Usher, deputy managing director of Persimmon Homes Yorkshire, said: “Everybody knows that there is a shortage of new housing and we’re working hard to deliver homes into the communities where they are most needed.”​

​​The group recently opened new developments in Easingwold, North Hykeham, Selby and Hornsea.​

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said​: “Persimmon continues to make hay while the sun shines.

​“​With accommodative monetary policy underpinning the housing market, interest rates are unlikely to rise markedly for now, and the lending practices review leading to sustainable growth in the future, the company is in a sweet spot.”