Persimmon hits out at property 'scare stories'

BRITAIN's most valuable housebuilder, Persimmon, today hit out at the media for knocking confidence in the property market as it predicted a surge in sales in the New Year. Chief executive John White said headlines screaming about a crash had dealt more of a blow to the sector than interest rate rises from the Bank of England.

He added that the market could even absorb another rate rise to 5%. 'I don't think the market would necessarily be harmed as long as there's not a lot of headlines about the effect on house prices,' he said.

'There is plenty of interest in buying a new home, it's not been transformed into sales at the moment as people have been holding back. We expect an upturn in the spring.'

It is not the first attack by a company on the way the media has covered the housing downturn as the Bank tackles rampant house price inflation. House price growth is expected to slow dramatically in 2005 after yet another bumper 12 months this year.

A bullish trading statement from Persimmon today showed its average selling price is likely to be up 11% in 2004 at £172,000. White expects growth in the market as a whole of 'around 3%' next year.

Persimmon's confidence in the housing market comes despite another gloomy report on the sector today, this time from the Royal Institution of Chartered Surveyors.

RICS said house prices fell at their fastest pace for 12 years in November with almost twothirds of its members reporting a drop. However, it did add that potential buyers are regaining interest.

Persimmon is seen as the pick of the sector by analysts given its strong landbank - today put at 59,000 plots - and geographical spread of properties. Completions are up 2% at 12,400.

The company today said it was on course to report full-year profits in line with expectations and confirmed it is likely to up the final dividend by 25%. Persimmon's shares climbed 11 1/2p to 690p, giving the company a market value of almost £2bn and strengthening its case for promotion to the FTSE 100 next year.

White said: "It's a question of when, not if.' Acquisitions were not on the cards, he added. "I've read a lot of comment about that, but we are thinking about organic growth.'