UK's Persimmon woos home buyers with 'mortgage free' offer amid slowdown fears

Shares gain on back of full-year 2022 performance

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But Q4 weekly private net sales halved to 0.30 units/outlet

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Current forward sales 1 bln stg vs 1.6 bln stg yr ago

Jan 12 (Reuters) - Britain's second biggest homebuilder Persimmon said on Thursday it was offering new customers a "10 months mortgage free" deal as it tries to revive demand for its homes in an industry grappling with an economic downturn.

Shares of the London-listed company climbed as much as 7.6% to a more than three-month high of 1,394.5 pence as the company also reported a generally better-than-expected performance for 2022.

The UK housing market has cooled in recent months, hit by a spike in mortgage rates and lower loan availability. Concerns about more interest rate hikes and the impact of red-hot inflation on households have added to the pressure.

The mortgage offer has garnered an increase in website enquiries in its first week, Persimmon said, but added that it was too early to predict when there will be a recovery in demand.

Last month, UK housing prices slid the most since the 2008 global financial crisis, while the number of mortgages approved in November fell to the lowest since mid-2020.

Persimmon said market conditions worsened in the fourth quarter, with weekly private net sales more than halving year on year to 0.30 units per outlet, and dropping to 0.19 in the last seven weeks.

The company gave limited detail on its 2023 outlook, but said that market conditions that led to a sharp hit to sales will also hurt its outlook for this year.

Despite the clouds hanging over the sector, Persimmon said it built 14,868 homes in 2022, towards the top end of its target, and saw a 5% rise in private average selling prices.

Persimmon's share rise boosted FTSE 100 peers Barratt and Taylor Wimpey too.

JP Morgan analysts in a note described the 2022 trading update as "mixed", but said Persimmon had delivered better than expected top-line and net cash positions, while fourth-quarter booking levels came in line with bigger rival Barratt.

Persimmon said current forward sales - deals signed between buyers and builders with a future date - stood at 1 billion pounds ($1.2 billion), down from 1.6 billion a year earlier.

Barratt on Wednesday said it would build fewer homes this year than last, while its order book was down about a third in roughly the last four months of the year.