Berkeley chief warns of housing market uncertainty during Brexit talks
The boss of housebuilder Berkeley Group has warned over a sharp drop in the levels of new builds across London as the property market faces a period of "prolonged uncertainty" amid Brexit talks.
Chairman Tony Pidgley said buyer confidence is being hit by Brexit and wider global instability, while recent tax hikes and planning red tape are holding back development.
The group, which is focused on London and the South East, called for "conditions for growth" to help the sector meet increasing housing demands in the capital.
But Mr Pidgley insisted Berkeley is in "excellent shape" after posting a 53% hike in profits to £812.4 million for the year to April 30.
The group remains on track to notch up at least £3 billion in pre-tax profits over the five years to May 2021, as long as property market conditions remain stable.
Mr Pidgley said: "I t is an inescapable fact that we are facing a number of headwinds and a period of prolonged uncertainty.
"Brexit and wider global macro instability impact both confidence and sentiment and will result in constrained investment levels.
"While these conditions are adequate to meet our profit guidance, they do not support the much needed growth in housing delivery in London."
Recent industry figures suggest the number of new house builds in London have tumbled by 30%, according to the group.
Berkeley said the pound's fall since the Brexit vote had sent prices of materials higher, with overall build costs 6% higher year on year.
The group said the year to the end of April was significantly affected by the EU referendum last year, with the value of reservations 25% lower than in 2015-16, but confirmed this had since fully reversed after a more stable second half.
Berkeley also reiterated concerns over the availability of labour after Brexit.
Chief executive Rob Perrins said: " There is a recognised skills gap in the UK construction workforce and it is hard to predict how build costs will be affected by Brexit as approximately half of London's site labour comes from the EU.
"This needs to be addressed by a combination of continued access to EU labour, skills training and innovation in construction."
The group sold 3,905 homes over the year to April 30 at at an average price of £675,000, up from £515,000 the previous year.
The higher selling price comes after it sold more higher value homes in central London.