LACK of mortgage availability for first time buyers is holding back the housing market, said housebuilder Persimmon today.

In a trading update covering the period from July 1 to November 15, it warned “further recovery in industry output and sales will be dependent upon an increase in the supply of mortgage products on appropriate terms”.

However, the firm, which has two developments within the region at Sefton and Ellesmere Port, said it was currently trading in line with expectations.

Sales volumes remain stable and prices and margins are holding firm, but the normal autumn increase in visitor levels and reservations failed to materialise.

The group says it expects to increase sales revenues by about 10% this year and complete the sales of 9,400 homes, compared with 8,976 in 2009.

It is also generating good cash levels and expects total borrowings to be lower than £80m at the year end, which is ahead of previous forecasts.

Today’s update also confirmed that the group is fully sold up for the current year and has more than £460m of sales already reserved beyond 2010, compared with £500m in 2009.

So far, in the second half of its financial year, the group has acquired about 4,000 new housing plots on 41 sites.

The update said: “We expect our performance for 2010 to demonstrate the progress we have made in pursuing our strategy of operating margin improvement and growth in operating cash generation.

“With the strength of our balance sheet and high quality land holdings we will continue to successfully develop our business in these challenging markets.”