Persimmon prospers despite land price hike

Price rises of 20% in the past two months have led to worries that the land market in the south east is overheating. Some housebuilders, anticipating a surge in future profits, are paying as much as œ800,000 an acre for sites around London.

Persimmon chairman Duncan Davidson said on Tuesday: "It's a silly period. We're somewhat cushioned by our long landbank at Persimmon, but the situation does concern us. We have seen overheating inside the M25, while very high prices are being offered and paid further out of London."

Announcing the company's interim results for the first half of the year, Davidson said Persimmon's house prices in South East England have climbed by 5 per cent since the end of June. Sites in the South Midlands, particularly Milton Keynes, are currently enjoying a similar jump in demand.

Persimmon is now the UK's fourth biggest housebuilder, having acquired Ideal Homes in February for œ177 million.

The company's latest results, including a four-month contribution from Ideal, showed Persimmon's turnover at œ203 million. Profit before tax was œ11 million.

Operating margins in the first half of 1995 stood at 9.3 per cent. Latest results show a 10.5 per cent margin from ongoing Persimmon operations and 8.7 per cent from former Ideal sites.

The purchase of Ideal has whet Davidson's appetite for more take-over activity. "Now we've been through the learning curve we would like to look at others," said Davidson. "Landbank is the key and we are short in some areas. We'd look at a regional play in an area where we're not strong."