Falling house prices forced Persimmon to reveal the largest land writedowns for a UK housebuilder as it contributed to the sector’s increasingly gloomy outlook.
In an unplanned trading statement, Mike Farley, chief executive, said house prices had suffered a sharp fall in September and more than a third of reserved house sales fell through as buyers cancelled, often because they could not secure a mortgage.
Persimmon’s £600m provision against its land bank reflects likely losses if it accounted for its building costs using previous years’ inflated land prices.
The writedowns, which will not impact on Persimmon’s cash position, will lead to large losses for the builder, something it managed to avoid even in the downturn of the early 1990s.
Financial Times, The Times, Daily Telegraph, The Independent