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Housebuilders still stymied by mortgage freeze

16 Nov 10 The reluctance of banks to give mortgages is continuing to impact on new housebuilding, according to major builders.

“Mortgage availability remains a constraint on industry volumes,” said Taylor Wimpey in an interim management statement today.

This echoes a similar message to shareholders from Persimmon yesterday: “Mortgage availability remains a major obstacle for customers who wish to purchase a home, especially first time buyers who do not have the required large deposits.  Further recovery in industry output and sales will be dependent upon an increase in the supply of mortgage products on appropriate terms. “

Despite this, both companies report trading to be in line with expectations. Taylor Wimpey said: “The group has performed well, with trading stable against a backdrop of economic uncertainty.  We are now fully sold for 2010 and we expect group profit before tax to be at the upper end of our expectations. “

It added: “Trading since the half year has been in line with our overall expectations, with sales over the summer slightly ahead and the autumn marginally below as customers awaited the announcement of the Comprehensive Spending Review.... We are fully sold for 2010 and, as we move into 2011, our sales focus remains on driving margin improvement, rather than growing volumes.”

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Persimmon’s experience is similar: “Since 1 July 2010, sales volumes have remained stable with sales prices and margins holding firm.  Although weekly sales increased gradually during September, we did not experience the normal autumn increase in visitor levels and reservations.” 

Persimmon added: “As previously stated at the time of our half year results announcement, we anticipate increasing our sales revenues by c. 10% this year.  We expect to legally complete c. 9,400 homes for the year ending 31 December 2010 (2009: 8,976), an increase of c. 5%.“

Persimmon is also fully sold up for the year.

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