Developer Persimmon suffers loss of £780 million

Posted under General by Jermaine

A prominent UK house developer Persimmon has registered whopping loss of £780 million for the year 2008 amid serious housing downturn, after being forced to write down its land bank value.

The housebuilder suffered pre-tax loss of £780 million in 2008, as against profit of £583 million in 2007, though it insisted that its financial condition was sound.

The company declared it was not in position to pay dividend, while chief executive, Mike Farley, warned that 2009 would be another challenging year for the company like 2008.

The slump in house sales has continued unabated with decline of 36% to 10,202. Average selling price also took a big dip of over £16,500 to £172,994.

Last week, Barratt Developments and Redrow announced big losses for second half of the year due to housing market slump.

Redrow’s pre-tax loss was £46.2 million compared to £35.8 million last year while Barratt’s pre-tax loss was whopping £592.4 million against profit of £192.4 million a year before.

Downturn in the housing market has led to huge job redundancies in the industry, Persimmon was also forced to cut 2,000 jobs in 2008.

According to Farley, slump in housing prices and interest rate cuts were prompting more enquiries from aspiring buyers, but escalating unemployment was making market recovery a distant proposition.

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