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| Housing demand down 20% on last year after Brexit vote and tax hikes, developer Berkeley says | |
| (35 minutes later) | |
| Demand for housing has slumped by 20 per cent in the last year, one of the country’s biggest builders has said. | Demand for housing has slumped by 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 £392.7m in the six months to the end of October, up from £293.3m over the period last year. | 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 £392.7m in the six months to the end of October, up from £293.3m 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. |
| Mr 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. | Mr 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 £1.4b for the half year, up from £1.1b over the period in 2015. | Revenues rose 34 per cent to £1.4b for the half year, up from £1.1b over the period in 2015. |
| The firm said it was on track to hit its three-year pre-tax profit target of £2b, first outlined in May last year. | The firm said it was on track to hit its three-year pre-tax profit target of £2b, first outlined in May last year. |
| It also announced a new target to haul in £3b of pre-tax profit for the five years from 1 May 2016. | It also announced a new target to haul in £3b 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. |
| Berkeley 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. | Berkeley 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 about 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 about 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. |