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Persimmon 'summer Offers'

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Funnily enough its not a 40-50% correction in prices - oh no what they want is 'incentives' !

Can only have been a few weeks back that Persimmon (The UK’s self acclaimed number one house builder ) released its 1/2 year results claiming rising prices, increased turnover and improved prospects and pipeline for the second half 2005 bucking the trend of all other major developers. So I was amused to see they are advertising ‘SUMMER OFFERS’ of 5% deposit paid, legal and survey fees paid, part exchange, carpets and flooring, stamp duty paid, 12 months mortgage contribution and cashback !! Of course none of this constitutes a price cut – oh no, actually they’ve probably just added it too the overinflated price in the first place.

Obviously things are going really well for Persimmon, they aren’t really desperate, they arent really cutting prices, oh no - they are just a great bunch of people who’d like to help little old you and me to get on the property ladder with a nice little bundle of incentives !

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Don't housebuilders sell alot of houses before they are built?

If so, they would be receiving the income from sales back in 2004 - so this would explain the increased turnover!

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Don't housebuilders sell alot of houses before they are built?

If so, they would be receiving the income from sales back in 2004 - so this would explain the increased turnover!

They tend to take deposits of around 5%-10% , rest due on completion - whenever that is lol! Deposits are often taken with no completion date secured , currently about to be investigated by the OFT Ithink for poor quality builds.

Better late than never I suppose .

D :)

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Funnily enough its not a 40-50% correction in prices - oh no what they want is 'incentives' !

Can only have been a few weeks back that Persimmon (The UK’s self acclaimed number one house builder ) released its 1/2 year results claiming rising prices, increased turnover and improved prospects  and pipeline for the second half 2005 bucking the trend of all other major developers. So I was amused to see they are advertising ‘SUMMER OFFERS’ of 5% deposit paid, legal and survey fees paid, part exchange, carpets and flooring, stamp duty paid, 12 months mortgage contribution and cashback !! Of course none of this constitutes a price cut – oh no, actually they’ve probably just added it too the overinflated price in the first place.

Obviously things are going really well for Persimmon, they aren’t really desperate, they arent really cutting prices, oh no -  they are just a great bunch of people who’d like to help little old you and me to get on the property ladder with a nice little bundle of incentives !

Is there anyone out there who sees these incentives (fees / deposit / stamp duty paid etc) as anything other than a price reduction? I cant see why the house builders persist with this nonsense.

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Guest muttley
Is there anyone out there who sees these incentives (fees / deposit / stamp duty paid etc) as anything other than a price reduction? I cant see why the house builders persist with this nonsense.

Maybe it's so the price falls don't show up in the official figures.

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Got it in one Mutley.

Builders will do anything other than put the list price down.

They lead the market for rises, 2nd hand property is always

priced relative to the equivalent new build.

Putting their prices down would immediately depress the

whole market.

ABB

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‘SUMMER OFFERS’ of 5% deposit paid, legal and survey fees paid, part exchange, carpets and flooring, stamp duty paid, 12 months mortgage contribution and cashback !! Of course none of this constitutes a price cut –

They sell upmarket, so average price might be £180K.

I make the incentives to be in the region £20-25K.

So... about 12%.

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They tend to take deposits of around 5%-10% , rest due on completion - whenever that is lol! Deposits are often taken with no completion date secured , currently about to be investigated by the OFT Ithink for poor quality builds.

Better late than never I suppose .

:)

Does anyone know when they book the 90-95% cost of the house? Is it when they receive the deposit, when they receive the cash or some time in the middle (eg when the build is "completed"). I wonder if they have bad debt provision of any sort?

Basically what I'm wondering is whether these headline profit figures, especially Persimon's, are anything like their cash flow figures or are they simply doing an Enron in some way?

For builders cash is king at this stage in the cycle. There could be some big discrepancies between perceived and real values in some big quoted builders.

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Guest Daddy Bear
Does anyone know when they book the 90-95% cost of the house?  Is it when they receive the deposit, when they receive the cash or some time in the middle (eg when the build is "completed").  I wonder if they have bad debt provision of any sort?

Basically what I'm wondering is whether these headline profit figures, especially Persimon's, are anything like their cash flow figures or are they simply doing an Enron in some way?

For builders cash is king at this stage in the cycle.  There could be some big discrepancies between perceived and real values in some big quoted builders.

Interesting

This is why i am reluctant to short the builders at present. I thought they were an obvious short but  there seems to be a time lag on profits and to be honest it is clever marketing to entice buyers.

When to short that is the question?

DB

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Got it in one Mutley.

Builders will do anything other than put the list price down.

They lead the market for rises, 2nd hand property is always

priced relative to the equivalent new build.

Putting their prices down would immediately depress the

whole market.

ABB

There might also be accounting reasons for it too.

They can probably put incentives down in a different bugdet and cook the books so it looks like they are doing better than they are. Call me a cynic if you like :-)

I wonder what percentage of the Hali-wide-track-Land Registry figures are from new builds bought with "incentives".

Edited by DoubleBubbleTrouble

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There might also be accounting reasons for it too.

They can probably put incentives down in a different bugdet and cook the books so it looks like they are doing better than they are. Call me a cynic if you like :-)

I wonder what percentage of the Hali-wide-track-Land Registry figures are from new builds bought with "incentives".

You're a cynic! :P;)

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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