Persimmon reports, another house builder seeing the benefits of Government intervention

One of the themes developing here is that it will be interesting to follow going forward the continued effect of Government and Central Bank intervention on the UK housing market and the benefit of this to UK quoted companies. I state the bullish case here and here and while I personally believe that UK house prices are too high and should fall if only a traditional free market response was in play, the reality is very different. With this in mind, this intervention can be monitored in part by keeping an eye on what the construction companies themselves are reporting.

This is what FTSE250 Persimmon had to say today.

We are encouraged by the announcements made in the Budget with respect to the Government's support both for customers wishing to enter the housing market and for those existing homeowners who aspire to move home. These "Help to Buy" measures include the provision of a Government backed 20% shared equity scheme commencing on 1 April 2013 to support customers who wish to buy a new build home. In addition, we look forward to working with the Government to develop the Government Mortgage Guarantee Scheme which is to be launched from 1 January 2014. We anticipate that this new Scheme will help mortgage lenders provide greater access to mortgage credit with smaller customer deposits at affordable interest rates.

As a result of these "Help to Buy" announcements customer enquiries registered on our Persimmon Homes and Charles Church web sites increased. Up until mid March enquiry levels had been running c.24% ahead of the prior year but following the announcement of the "Help to Buy" measures this improvement increased further to c.30%. We have experienced encouraging improvements in both visitor numbers and reservations at our developments over the last two weeks. Whilst it remains too early to measure any increase in legal completions as a result of the "Help to Buy" Scheme, we remain confident of the strength of underlying demand for new homes in the UK and that these measures will support an increase in the number of new homes delivered by the industry over the medium term.

http://www.digitallook.com/news/rns/20835756-10277/PSN-Interim_Management_Statement_html?ac=,&username=,

Whether we like it or not it would be foolish to overlook the likely impact of the intervention to come, there are few reasons to be bearish when it comes to housing stocks. One would have thought that only the badly managed ones will miss out.