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UK housing market steadies after Brexit dip, Persimmon says
[LONDON] Britain's housing market has steadied after some deal cancellations immediately after the country voted to leave the European Union, housebuilder Persimmon said on Tuesday.
Chief executive Jeff Fairburn said it was too early to judge the impact of the June 23 "Brexit" decision, but his company's focus on lower priced deals involving first-time buyers and first-time movers made it well placed to cope with any turmoil.
"There is some uncertainty among people about what's happened and that's natural, but we've not seen that translate to any significant change in our trading," he told Reuters.
Britain's top housebuilders, including Taylor Wimpey, Barratt and Berkeley as well as Persimmon, saw a combined 8 billion pounds (S$14.25 billion) wiped off their market value following the Brexit vote.
Although the stocks have seen some recovery since, they are still trading below their pre-referendum levels, with confidence rattled by the first suspension of a UK property fund since 2008, multiple analyst downgrades of the sector and government warnings over a possible fall in house prices.
At 0900 GMT, Persimmon shares were down 4.6 per cent at 1,369 pence, despite the company posting a 12 per cent rise in first-half revenue and saying it was on track to meet analysts' consensus revenue and profit forecasts for the full fiscal year.
Hargreaves Lansdown analyst Laith Khalaf said investors were likely to "push the sell button first, and ask questions later" until a clearer picture of the housing market emerged.
Retirement home builder McCarthy & Stone said last week uncertain market conditions could affect its ability to meet its full-year sales volume target, while London-focused estate agent Foxtons said its earnings could fall.
Analysts said Persimmon was in a good position to cope with any turbulence, with a strong land bank and forward orders of 1.36 billion pounds as of June 30.
It also has a further 5.50 pounds per share to return to investors under a previously announced scheme running until 2021, which Mr Fairburn said remained on track.
Liberum analyst Charlie Campbell wrote in a note that the company's dividend yield should "at least" support its shares.
Persimmon said legal completions rose 6 per cent to 7,238 units in the six months to June 30, adding it had "good levels" of sales in May and June.
When asked what the company would do if Brexit led to a recession, as some economists have warned, Mr Fairburn said it could stop buying land and instead conserve cash.