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Post-Brexit housing demand drops 20% on last year after tax increases, Berkeley says | |
(35 minutes later) | |
Demand for housing has slumped 20 per cent in the last year, one of the country’s biggest builders has said. | Demand for housing has slumped 20 per cent in the last year, one of the country’s biggest builders has said. |
Berkeley chief executive Rob Perrins blamed the dramatic fall in volume on “higher stamp duty, the extraordinary attack on buy to let landlords… and the uncertainty caused by Brexit,“ | Berkeley chief executive Rob Perrins blamed the dramatic fall in volume on “higher stamp duty, the extraordinary attack on buy to let landlords… and the uncertainty caused by Brexit,“ |
Despite the slump and the continued shortfall in housing supply, south-east focused Berkeley recorded a 34 per cent rise in pre-tax profits to £392.7 million in the six months to the end of October, up from £293.3 million over the period last year. | |
The earnings boost came as the firm sold fewer homes at a higher price, with 2,076 homes sold at an average selling price of £655,000 over the period, compared to 2,091 homes sold for an average £506,000 last year. | The earnings boost came as the firm sold fewer homes at a higher price, with 2,076 homes sold at an average selling price of £655,000 over the period, compared to 2,091 homes sold for an average £506,000 last year. |
Perrins said the drop in reservations was in line with the beginning of the year and there were signs that the market had started to adjust to the pressures. | Perrins said the drop in reservations was in line with the beginning of the year and there were signs that the market had started to adjust to the pressures. |
Revenues rose 34 per cent to £1.4 billion for the half year, up from £1.1 billion over the period in 2015. | Revenues rose 34 per cent to £1.4 billion for the half year, up from £1.1 billion over the period in 2015. |
The firm said it was on track to hit its three-year pre-tax profit target of £2 billion, first outlined in May last year. | The firm said it was on track to hit its three-year pre-tax profit target of £2 billion, first outlined in May last year. |
It also announced a new target to haul in £3 billion of pre-tax profit for the five years from 1 May 2016. | It also announced a new target to haul in £3 billion of pre-tax profit for the five years from 1 May 2016. |
Mr Perrins also cited the US election as a factor adding to the uncertainty hitting the housing market, but said pricing remained resilient and was above its business plan levels. | Mr Perrins also cited the US election as a factor adding to the uncertainty hitting the housing market, but said pricing remained resilient and was above its business plan levels. |
Berkely Group was demoted to the FTSE 250 in September after its stock price took a hammering following Britain's vote to leave the European Union. | Berkely Group was demoted to the FTSE 250 in September after its stock price took a hammering following Britain's vote to leave the European Union. |
Shares were up nearly 4 per cent during morning trading on the London market, but still remain around 22 per cent lower than before the Brexit vote. | Shares were up nearly 4 per cent during morning trading on the London market, but still remain around 22 per cent lower than before the Brexit vote. |
The group said it would change a five-year dividend plan announced prior to the EU referendum and would now return some of the cash through share buy-backs and dividends. | The group said it would change a five-year dividend plan announced prior to the EU referendum and would now return some of the cash through share buy-backs and dividends. |
It said it had taken the step because the “current heightened macro uncertainty has led to significant market volatility and there is a dislocation between this and both underlying market conditions and the strength of Berkeley's operating model.” | It said it had taken the step because the “current heightened macro uncertainty has led to significant market volatility and there is a dislocation between this and both underlying market conditions and the strength of Berkeley's operating model.” |
Last month, fellow housebuilder Taylor Wimpey said the housing market had been “robust” since the Brexit vote, but revealed a rise in cancellations and a slight fall in sales | Last month, fellow housebuilder Taylor Wimpey said the housing market had been “robust” since the Brexit vote, but revealed a rise in cancellations and a slight fall in sales |