‘The housing market in London and the South East has now stabilised’ – Berkeley

Influential housebuilder reports robust demand with cancellation rates at normal levels; profits expected to be 'at the top of analysts' expectations'

Tony Pidgley’s Berkeley Group has calmed a few nerves in the sector with its latest trading update.

Arguably Britain’s most influential housebuilder said the market in the London and the South East “has now stabilised”, with “robust” enquiry levels and “resilient” pricing (above business plan levels, even).

Underlying reservations in the key post-Brexit period from August to February were still down 16% on the same period last year, which the firm blamed on market uncertainty and changes to SDLT and mortgage interest deductibility, but the ongoing availability of cheap mortgages and a currency advantage for overseas buyers had offset some of these effects.

The statement also included another stark warning on the supply problems facing the capital.

The current planning environment and increased demands from the combination of affordable housing, CIL, Section 106 obligations and review mechanisms have caused new starts in London to fall by some 30%, said the firm, which is itself battling to get 22 sites through planning, pre-commencement conditions or other enabling issues.

The statement added: “Berkeley is concerned by this under-supply and the knock-on effect it has on the provision of housing of all tenures which, if not addressed, represents a threat to London remaining the inclusive and open global city which is so important to London and the UK’s growth and prosperity.”

Pre-tax profits for the current financial year are expected to be “at the top end of analysts’ expectations”, with similar performance predicted for the following year. The ambitious target to deliver at least £3 billion of pre-tax profit over the next five years remains firmly in the crosshairs…