Persimmon gets over homes rough patch around election

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The housebuilder delivered first-half revenues of £785 million after sales increased by more than 16% to 4,657 homes and average selling prices rose 8% to £168,500.

Chief executive Mike Farley said much of the price rise was due to a switch in focus from cheaper apartments to more expensive homes.

Stripping this change in "mix" out, underlying prices were up 3% in the first six months of the year, and margins leapt from 1.5% to 7.5% as Persimmon cut costs.

JP Morgan Cazenove analyst Anthony Codling said it was a "robust" trading update and Persimmon shares rose 5% or 17p to 365½p.

"All of this confirms our view that the UK housing market is recovering, or at worst stable," he said. "It is definitely not in decline."

Farley said the normal summer slowdown in sales since the start of May was exacerbated by uncertainty ahead of George Osborne's austerity Budget.

The prospect of tax rises, spending cuts and thousands of job losses knocked confidence. Mortgage lending also remains subdued.

Persimmon's debt fell to £122 million at the end of June from £494 million a year earlier and £267 million at the start of 2010. It is expected to fall to below £100 million by the end of the year.