Persimmon cuts divi as loans chaos takes toll

STORM clouds gathered over the housing market as one of Britain’s biggest builders warned of falling sales and prices and cut its dividend following chaos in the UK mortgage markets.

FTSE 100 giant Persimmon, which builds more than 14,000 homes a year, said average weekly sales across its sites have dropped by over 20pc in the last four months.

It also revealed cancellation rates rose over the past six weeks creating ‘uncertainty’ around the business, while average sale prices were down around 2pc.

The warning sent Persimmon shares down 5.2pc or 69p to 1254p, adding pain to the industry.

The UK’s eight major housebuilders in the FTSE 100 and FTSE 250 have seen about £18bn wiped off their market value this year with the darkening economic outlook.

Persimmon’s bleak update came just a day after Halifax reported the average cost of a home fell by 0.4pc in October, the sharpest decline since February last year.

Persimmon attributed its sales decline to higher interest rates and reduced mortgage availability as well as ‘increasing cost of living pressures’ and the ‘disruptive political conditions and deteriorating economic outlook’.

Paul Hurst, Persimmon’s UK managing director, said the market was in ‘chaos’ in September as lenders pulled home loans in the aftermath of Kwasi Kwarteng’s disastrous mini-Budget.

Persimmon plans to set aside about £350m to cover repairs for unsafe cladding, up sharply on a previous sum of £75m, and scrap its current dividend policy.