Berkeley: new home reservations have fallen 20%
Berkeley Group, the high end UK housebuilder, has warned that reservations on new homes have fallen by a fifth in the first five months of the year, due to a combination of the forthcoming EU membership referendum, weakening demand for luxury properties in London and the group launching fewer new schemes this year.
Presenting full-year results on Wednesday, the housebuilder, which is focused on London and the south-east of England, raised concerns that transaction levels in both the second hand and new homes market have not increased to “the levels we all would hope for at this stage in the cycle”, said Nathalie Thomas.
Revenue in the year to April 30 fell to £2.05bn from £2.12bn, while pre-tax profit also edged down to £530.9m from £539.7m a year earlier. It said:
Global macro uncertainty and the impending EU Referendum have had a dampening effect on investment levels across all businesses and this is likely to continue up to and immediately after the result of the Referendum. This, along with the market adjusting to higher levels of property transaction taxes, has affected the upper end of the housing market in London, although underlying interest and demand remain good.
Appetite for high-end properties in the UK capital has been waning following changes to stamp duty in December 2014, while agents have also cited factors such as a reduction in overseas buyers following the commodities slowdown and weakening of emerging market currencies.
The company also sold a large number of its developments in London in 2013 and 2014 and did not bring any new schemes to the market in the first five months of the year.
In his statement accompanying the results, chairman Tony Pidgley threw his weight behind the UK remaining in the EU. He said:
The outcome of next week’s referendum on Britain’s membership of the European Union is significant for the UK’s housebuilding and property sector. Berkeley supports a vote to remain in the EU. London’s status as the world’s best big city is underpinned by labour mobility, cultural diversity and a constant influx of talent and investment from around the world, and the UK economy in turn is powered by the success of our capital city.
However, London will always be a world city and a highly desirable place to live, work and play. For Berkeley, our brand, our land holdings and our forward sales will continue to differentiate and underpin our performance over the long term and, while we have a clear view about what the better outcome would be on Thursday 23 June, we are confident about the future for our business.
Property surveyors have predicted the first fall in UK house prices this year since 2012. Members of the Royal Institution of Chartered Surveyors said in a closely-watched survey published earlier this month that prices in London had already started to fall.