Persimmons, Home Builders Decline

123jump.com Staff
24 Apr, 2008
New York City

UK home prices declined by 2.5% in March from February but were 1.1% higher than a year ago. For the month, the standardised house price was at

[R]1:00AM New York, 5:00PM London - U.K. house prices declined 2.5% in March.

London stock indexes dropped after a report showed house prices declined in March and after Persimmon reported that it has postponed the commencement of scheduled new sites until the mortgage market improves.

Market sentiment

In London trading FTSE 100 fell 0.54% or 32.9 to 6,050.70.

Of the 102 FTSE 100 stocks 42 increased, 57 declined and 3 were unchanged. Reckitt Benckise led advancers in the index shares with a rise of 7.19% after the company reported that profit in the three months to March rose by 26%.

House prices fall 2.5% in March

HBOS reported in its Halifax House Price Index on its Web site that home prices declined by 2.5% in March from February but 1.1% higher than a year ago.

For the month, the standardised house price was at £191,556.

Prices in Greater London rose1.6% and prices increased 1.4% in East Anglia and 2.2% in East Midlands. Prices however fell in West Midlands by 5% and dropped 4.7% in Wales.

HBOS also says it expects a modest low single digit decline in UK house prices this year.

UK prices have increased 171% over the past ten years and 51% over the last five years and the average UK home price has risen by £120,860 during the past decade from £70,696 to £191,556.

All twelve UK regions have experienced substantial house price rises over the last ten years, ranging from 146% in Scotland to 271% in Northern Ireland. Average prices increased by 191% in Greater London, 188% in Wales and 150% in West Midlands during the period.

Chief economist of HBOS Martin Ellis commented, “Sound economic fundamentals are supporting house prices. A strong labour market, low interest rates and a shortage of new houses underpin housing valuations. Our research shows that the labour market is the key driver of the housing market. Employment is at a record high and unemployment continues to fall.""""

Persimmon revenue fall 24%

Persimmon reported in its first interim report on its Web site that over the last three weeks the unprecedented tightening in the mortgage market has caused a further deterioration of the housing market leading to lower sales volumes and increased cancellation rates.

Total revenue for 2008 declined 24% at £1.37 billion compared to £1.80 billion last year as volumes fell by 18% due to an increase in the amount of partnership homes that are being build.

The homebuilder has since postponed the commencement of scheduled new building sites until the mortgage market improves.

Gainers & Losers

Reckitt Benckise led advancers in the FTSE 100 stocks with a rise of 7.19% followed by rises in British Airways of 3.78%, in National Grid of 2.50%, in Admiral Group of 2.40%, and Severn Trent of 2.26%.

Reckitt Banckise rose after the company reported today that net income rose by 26% to £225 million in the quarter to March.

Eurasian Natural led decliners in the FTSE 100 stocks with a drop of 7.75%, in Schroders Plc of 6.68%, in Persimmon Plc of 6.38%, in Schroders Plc-NV of 5.31%, and Thomas Cook Group of 5.16%.

Persimmon and other homebuilders fell after HBOS said house prices fell by 2.5% in March. Home Retail Group shed 3.92% and British Land Co. fell 3.42%.

Commodity stocks also slumped after crude oil prices dipped to $117 per barrel and gold prices declined below $900 per ounce. Antofagasta shed 4.99%, Rio Tinto declined 4.09% and BHP Billiton fell 4.05%.