Berkeley profits rise in first half but group cautious over future
8 December 2017
Berkeley has seen interim profits leap as the housebuilder upgraded its long-term forecast off the back of strong demand in the South East, but the firm also warned over political uncertainty hanging over the property market.
The company posted a 36% rise in pre-tax profits to £533.3 million in the six months to October 31, while revenue grew 14% to £1.6 billion.
Berkeley sold 2,117 homes in the period, up marginally from last year but at a much higher average selling price of £719,000, compared with £655,000.
The company said its pre-tax profit guidance has now been upgraded to £3.3 billion from £3 billion.
However, Berkeley added that the 2017/18 full-year results will represent a "peak", before going back to more normal returns in 2018/19.
The firm also warned over the future, with Boss Rob Perrins saying: "There remains good underlying demand for property in London and the South East, but the combination of uncertain UK economic and political outlook and high property taxation continues to mean customers are more circumspect and inevitably purchasing later in the development cycle.
"Brexit uncertainty and concerns over growth and inflation, coupled with the changes to SDLT (stamp duty land tax) and mortgage interest deductibility, continue to impact the market."
Berkeley flagged the high levels of tax involved in buying a property, and welcomed the Government’s recent move to scrap stamp duty for first-time buyers on the first £300,000 of properties worth up to £500,000.
There have been contrasting views among builders on the housing sector in recent weeks, although most agree there is a clear slowdown in London – Berkeley’s main market.
The group put this down to prior changes to stamp duty, adding: “Other changes to SDLT and mortgage interest deductibility in recent years remain a constraint on transaction levels and social mobility.
“This is felt most keenly in London, where all housing transactions are down 18% since last year and new starts remain more than 30% down on 2015.”