Mini-budget sent new home sales crashing, says Persimmon

PERSIMMON, the UK’S second biggest housebuilder, has said home sales dropped by 20pc following the economic and political turmoil triggered by Liz Truss’s mini-budget.

The FTSE 100 builder said it had recorded a fall in demand for new homes, a rising number of cancellations and a decline in selling prices in recent months, blaming “increased interest rates and reduced mortgage availability, together with increasing cost of living pressures”.

Prices and sales have dropped even more sharply in recent weeks “reflecting the uniquely disruptive political conditions and deteriorating economic outlook since September”.

Ms Truss and Kwasi Kwarteng’s minibudget in late September led to turmoil in financial markets and ultimately brought down their administration.

It triggered dramatic changes in government bond prices and interest rate expectations, which are used to price mortgages. Several lenders, including Halifax, HSBC, Santander and Nationwide, pulled deals from the market following the price moves and borrowing rates rose sharply across the board.

Last week, the Bank of England announced its biggest interest rate rise since 1992 and warned the UK was facing its longest recession on record.

Dean Finch, Persimmon chief executive, said: “Rising interest rates and broader economic uncertainty are clearly impacting mortgage lending and customer behaviour and this is reflected in our recent weekly sales rates and forward sales position.”

The average number of weekly sales per branch was 0.60 between July 1 and Nov 7, down from 0.78 a year earlier. Sales dropped to 0.48 per branch by the end of the period, 20pc below average.

Forward sales stood at £770m as of Nov 7, compared with £1.15bn this time last year. Cancellations climbed from 21pc to 28pc in the four months to November. Shares fell 5pc yesterday.

Persimmon is to cut its dividend next year to free up £275m, which will help to cover costs for fixing cladding issues.