The managing director of one of the West Midlands’ most prolific building firms has painted a rosy picture of the market after a sharp rise in sales.
Persimmon Homes West Midlands, which is involved in 18 developments in the region, saw revenue increase as parent firm Persimmon posted a 27 per cent rise, to £776.6 million, for the first half of the year.
Managing director Dominic Harman said the company had benefited from the change of Government, which has brought a relief from red tape, and believed more mortgages were available for potential buyers.
The company has helped to turn around its fortunes locally by focusing on traditional family homes rather than apartments, which have lost value.
Mr Harman said: “We have re-planned a number of our sites to give us more two, three and four-bedroom, two-storey properties, and that competes well with the second-hand market.
“The encouraging thing is that the visitors to our developments in the area have been stable throughout the year.
“We are seeing buyers’ confidence improve. ‘We are also seeing improvements in mortgage-lending and loan-to-values are getting better,’’ he said.
‘‘It is a misconception that you need to put 15 per cent down to buy a house.
‘‘You can buy with five per cent, but the terms are different.”
Average selling prices in the region are about £160,000, and Mr Harman said that figure would have dropped as the prices of apartments have dropped by more than double that of traditional houses.”
Mr Harman said conditions had improved, but the result of the forthcoming spending review remained critical for Persimmon.
However, he said he was heartened by Government action including scrapping Home Information Packs (HIPs).
“Everybody wants to know what is going to happen in the spending review in October but at the moment it is not affecting confidence. The encouraging thing that the Government has recognised a strong housing market is good for the economy.
“The abolition of HIPs was a big win for us. It was costing people money and nobody was asking for them. The raising of stamp duty to less than £250,000 for first-time buyers has also been helpful.
“They are willing to listen and look at the red tape the previous Government was burdening the industry with.
“They are listening more but it would be nice to get the spending review over.”
Persimmon directly employs 100 people in the area, and hundreds more work on its developments across the West Midlands.
The company completed 4,657 units in the six months to June 30, up by 16 per cent on the first half of 2009.
That helped to increase pre-tax profits to £101.4 million, after a giant leap from £9.8 million in the same period last year.
Total net borrowings at June 30 were £122.1 million, down from £494.2 million at the same stage last year, and the firm’s ongoing strategy is further reduction in debt and improvement in operating margin.
Chairman John White said: “Overall, whilst we currently remain cautious, we are optimistic about the future of our business.
‘‘We have a strong balance sheet, excellent cash generation, national coverage and an experienced management team.”