Wednesday newspaper share tips: Persimmon perused by pundits

"Persimmon is really only as safe as the houses the government pays it to build," contends Financial Times' Lex column.

It noted the demand-over-supply mismatch in the UK housing market, boosting prices.

This made for fertile ground in Persimmon's case.

"But," opined Lex, "it is only doing so well because of taxpayer support, which cannot last."

The house builder's shares have soared since its well-received interims on Tuesday, in which it shrugged off the damage wrought by Brexit and issued a pleasing outlook.

Persimmon has no London exposure, which stands it apart from many of sector players. It also had no debt.

"As a result, its shares trade at the highest premium over its net asset value of any of its domestic peers," said Lex, citing Liberum estimates.

The columnist then pointed to the government's Help to Buy mortgage scheme aimed at getting first-time and low-income buyers on the property ladder with marginal deposits.

Roughly half of Persimmon's six-months sales depended on these mortgages, an above average ratio to the company's peer group.

The Help to Buy scheme has a further four years to run, and thus Persimmon anticipated plenty of buyers to cross its thresholds in years ahead.

Lex warned that one should not assume Persimmon had its good fortune locked down.

"If greater affordability is the aim, subsidising house buyers ultimately fails; the help makes prices rise faster, making houses less affordable again," the column said.

"Assuming that Help to Buy will endure includes a risk."

By contrast, The Times' Tempus column suggested Persimmon was a 'Buy', saying the housing boom was showing no signs of ending.

"I suggested, immediately after the referendum and the fall in prices across the sector, that shares in the house builders were looking stupidly cheap on any reasonable assumptions on the housing market and people's desire to own their own homes," Tempus said.

And so it was, the column said.

"Some have been wondering whether further stimulus to housebuilding in the autumn, given the UK's chronic shortage, might provide the industry with a further fillip," Tempus contended.

The column said Persimmon's interim numbers were among the most confident the house-building sector has produced since the non-binding Brexit referendum.

"There is simply no sign of a turndown in demand for new homes, even if demand may be flattening for second-hand ones," it continued.

Tempus observed Persimmon's shares were still shy of the £21 or so that they were at before the vote. The yield was still 5.9%, which is a good enough reason for hanging on.