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Berkeley sees house sales dive 20% amid Brexit fears

Published 15/06/2016

Housebuilder Berkeley said sales have been hit by uncertainty over the EU referendum
Housebuilder Berkeley said sales have been hit by uncertainty over the EU referendum

Housebuilder Berkeley Group added to fears over the impact of the EU referendum on the property market as it revealed that sales had plunged by a fifth amid Brexit uncertainty.

The group, which is focused on London and the South East, said reservations had tumbled by 20% in the five months to May, with new development launches put on hold in the run-up to the vote.

Berkekey said higher-end developments have been hit the hardest, compounded by the recent stamp duty hike for buy-to-let properties and second homes.

Chairman Tony Pidgley 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."

He added: "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."

Shares in housebuilders have been sent reeling in recent weeks amid mounting worries that Brexit could send property prices falling and impact sales.

Crest Nicholson admitted on Tuesday that a vote to leave would cause "business disruption", while a survey of chartered surveyors last week warned over a drop in prices for the first time since 2012.

Berkeley said the sales fall in the first five months of 2016 left reservations down 4% overall in the year to April 30.

But it posted a 5.6% rise in underlying pre-tax profits to £479.9 million.

Bottom-line pre-tax profits fell 1.6% to £530.9 million due to lower profits from the sale of ground rent assets.

The group said that, despite the recent referendum hit, underlying demand in the housing market remains "robust" and it stuck by aims to deliver a combined £2 billion of pre-tax profits over the three years to end of April 2018.

Mr Pidgley - who was appointed a Commander of the Order of the British Empire (CBE) in the 2013 New Year Honours list - put faith in the firm's ability to withstand Brexit.

He said: "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."

It said it was focusing sales activity "beyond 2017/18" and planning new development launches later in the year, "once the EU referendum uncertainty passes".

The firm sold 3,776 homes in the year to the end of April, up from 3,355 a year earlier, although the average selling price dropped to £515,000 from £575,000 due to the type of properties sold.

Forward sales stood at £3.25 billion, up from £2.95 billion the previous year.

Analysts at Jefferies said Berkeley delivered a "strong performance", given the recent slowdown in reservations.

Experts at UBS added: "While we recognise the referendum risk, we see Berkeley in a robust position to weather any weakness in the market."

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