UK Housing Boom: Persimmon Profit Leaps 57% on Higher Property Prices

The double-digit rate of house price growth in the UK lifted the country's largest housebuilder, Persimmon, to a 57% leap in profit.

For the first six months of 2014, Persimmon said its underlying profit before tax hit £212.9m (€266m, $355m), up sharply from £135.3m. And its revenue jumped 33% to £1.2bn.

Britain's housing market is in recovery mode. Low interest rates and a healing domestic economy have increased mortgage demand, in turn driving up houses prices because of a lack of supply – and imbalance construction firms are taking advantage of.

"Persimmon has produced another strong performance in the first half of 2014, taking advantage of the current market opportunities to deliver growth whilst strengthening the financial position of the business," Jeff Fairburn, chief executive, said.

"As we have entered the traditionally slower summer trading weeks, we have been encouraged by our private sale reservation rate since 1 July which is currently running 9% ahead of the same period last year."

The firm's completions increased 28% to 6,408 new homes sold over the half year period, with average selling price lifting 4.3% to £186,970. And its forward sales are 22% ahead of 2013 at £1.53bn.

According to the Office for National Statistics (ONS), the average price of a UK home jumped 10.5% in the year to May 2014 hitting £262,000.

But the pace of price growth may slow over the coming months. Regulators have moved to tighten the mortgage market over household indebtedness concerns. And construction work is picking up, which should help to address the chronic lack of housing supply.