“Persimmon profits rise 13% after help-to-buy boost”

Owl says; Summary – take care of your donors and they will take care of you.

“The housebuilder Persimmon has reported that its profits rose by 13% in the first half of the year, boosted by the government’s help-to-buy scheme and competitive mortgage deals.

Pretax profits jumped to £516m from £457m in the six months to 30 June, and Persimmon said it expected further growth in the second half of the year, bucking the wider trend of a slowing UK housing market.

“We have continued to experience good levels of customer interest in our housing development sites as we trade through the quieter summer season,” said the Persimmon chief executive, Jeff Fairburn.

“Customers are continuing to benefit from a competitive mortgage market and confidence remains resilient based on healthy employment trends and low interest rates.”

Britiain’s second biggest housebuilder angered shareholders earlier this year after handing Fairburn a £75m bonus. A report published last week by the High Pay Centre revealed Fairburn was the highest paid FTSE 100 boss in 2017, with a £47.1m package.

Persimmon sold 8,072 new homes in the first half of the year, up 4%. The average selling price increased by 1%, to £215,813.

The housebuilder has been one of the biggest beneficiaries of the government’s help-to-buy programme, which has lifted sales and supported house prices across the UK. …”

https://www.theguardian.com/business/2018/aug/21/persimmon-profits-rise-housing-market-help-to-buy

2 thoughts on ““Persimmon profits rise 13% after help-to-buy boost”

  1. As I have said on several previous occasions, providing subsidies to help first time buyers who would otherwise not be able to afford a deposit (but who in the end turn out to be affluent middle-class Tory voters – surprise, surprise) is never going to fix the housing market by making house prices more affordable. The economic law of supply and demand means that in a market where demand exceeds supply house prices will always reach the levels that someone can afford – and so giving a subsidy effectively allows house builders to raise prices.

    Well, here is the evidence to support that proposition.

    And if I can predict this, even though I am not an economist, I am sure that the Government economists and Ministers could have also foreseen this – so the only logical explanation is that this was a deliberate – and immoral / corrupt – policy by the Conservative Government to repay the developers who are Conservative Party donors by giving them a plausibly deniable backhander.

    Conservatives – for the morally corrupt few, not the rest of us many.

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    • The law of supply and demand says that monopolies maximise prices and reduce availability to ensure profitabl sales. There is no oncentive to release cheap product where profit comes first.

      So paying builders a discount just hikes up the price and reduces the availability.

      The key to all of this has been the action of governments to prevent local authorities from building houses on their own finances, where profit was not a motive, but delivering social housing was. Because delivery was paramount, underspending was used to build more houses.

      Having local authorities purchase houses from builders instead of building their own does not solve the problem. The profit element ensures that houses can never be built cheaply in a closed market.

      So we know the problem and we know the solution, which would fit neatly into the austerity concept – by sharing the austerity out instead of guaranteeing private profits. And we also know that government will not do it. They’d rather see local councils vanish from the land than own any land.

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