Housebuilders regain confidence

Housebuilders in the UK have confidence in their market in spite of rising interest rates, a forecast of a slowdown in the housing market and recent stock market turbulence.

Chief executive of Britain’s second largest homebuilder, Persimmon, Mike Farley, said that families were still prepared to take out mortgages to buy their homes in some of the most expensive parts of the country, like the South East and the Home Counties, despite the rising cost of buying a home. He said: “Mortgage funds are readily available. There may be some slight tightening but I believe generally there is plenty of money available for mortgages. We see no sign of this changing.”

John Hunter is chief executive of upmarket London developer Northacres. He believed there was no sign of a downturn in the global appeal of central London prime residential property. Despite the latest figures showing the merest drop in London prices in July, most experts predict that property prices in super-prime London – areas like Mayfair and Belgravia – will almost double over the next two or three years, with rich foreign buyers fuelling the demand.

Recent events, like the drop in inflation to 1.9%, and the turmoil in financial markets, have made a rise in interest rates to 6% less likely than it was a few weeks ago. Interest rates may, after all, have peaked. September is traditionally a month when buyers come back to the market after a quiet summer.

Persimmon saw a 9.8% rise in pre-tax profits to £281.1m for the first half of the year, just ahead of City expectations. Its completed sales fell from 8,226 in the first six months of 2006 to 8,002 for the same period in 2007. Average selling prices, however, went up from £188,427 to £189,225.

Northacre benefited from luxury developments in London and profits were up by 12% to the end of February.