Persimmon, the UK’s biggest housebuilder, bravely predicted yesterday that the market would not get any worse, in stark contrast to the gloom being reported by its rivals.

The builder surprised analysts by saying that after a collapse in sales in April, volumes had stabilised. It also said that it would open 40 sites this autumn in a sign that it was poised to take advantage of any recovery in the housing market.

However, the company gave warning that a 5 per cent slide in prices so far this year was likely to continue, as it faced the most challenging trading conditions in its recent history. The cautiously optimistic predictions from the York-based group pushed its shares up by 10 per cent to 338p as the sector enjoyed a mini-recovery.

Mike Farley, group chief executive, said: “I hesitate to call this market but it’s not getting any worse.” Mr Farley added that reports this week of Alliance & Leicester, the bank, raising £400 million from the sale of bonds backed by prime mortgages - only the second such sale in more than a year - indicated that the mortgage market could become easier.

“We still have visitors coming to our sites who want to buy, but sales are worse simply because of the difficulty in getting a mortgage,” he said. “The next 12 to 18 months are still going to be very tough, but when a recovery comes we will be ready.”

Persimmon reported a 64 per cent plunge in first-half pretax profits to £100.9 million for the six months to June 30 – down from £281.1 million in the same period last year. At the same time, it cut its dividend by 73 per cent to 5p a share, saying that it was prudent to conserve cash at this time.

The builder’s home sales have fallen by 31 per cent year-on-year, but it also reported that cancellation rates were lower than the 40 per cent peak seen this year. In contrast, Bellway, which opened the reporting season last week, gave warning that it had suffered an avalanche of cancellations in the past two months.

Mr Farley said that he hoped the Government would step in to help first-time buyers. “We support any action the Government wants to make, but whatever they do, it should be done sooner rather than later,” he said.

Persimmon has moved further into building social housing to protect itself during the downturn. Of the 5,501 completions it made in the first half of the year, 20 per cent were in that speciality. The company started building social housing after its acquisition of Westbury in 2006. “This is good, guaranteed business in uncertain times,” Mr Farley said.

Government figures out yesterday showed that the number of social housing units being built in England had leapt to its highest for 11 years.

Overall, housing starts for the June quarter were, at 33,400, about 19 per cent lower than in the corresponding quarter in 2007, but 2 per cent higher than in the previous quarter this year.

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