6th Sep 2016 06:21
LONDON (Alliance News) - Berkeley Group Holdings PLC on Tuesday said reservation levels in August were once again 20% below the prior year, as they had been for the first five months of 2016, though the UK housebuilder said visitor numbers and enquiries had remained strong.
Berkeley, which almost exclusively focuses on more-expensive developments in London and the South East of England, had in June said its reservations had been down on the prior year for the first five months of 2016. Berkeley had said this was due to customers adjusting to higher property taxes and the uncertainty ahead of the UK vote on European Union membership.
On Tuesday, Berkeley said there had been a hiatus on either side of the referendum vote, but said the market had in August returned to the levels recorded for the first five months. This, it said, reflected the lower levels of available product, as well as broader market conditions. Berkeley said customers are taking longer to commit, though visitor numbers and enquiries have been at similar levels to a year earlier.
Berkeley said pricing has remained resilient and above business plan levels, with reservation cancellation rates at normal levels, following a temporary and expected increase after the Brexit vote.
Meanwhile, Berkeley noted that the UK government's policy on taxes had hindered growth in London.
"Transaction taxes are now too high, and this is restricting both mobility in the second hand market and the pace of supply and delivery of new homes in London and the South East," the company said.
Berkeley also pointed to a tension between the national policy on starter homes and the London mayor's ambition to build more affordable housing, while the very high rates of the community infrastructure levy adopted by local authorities now pose a significant threat to development viability.
While these challenges exist, Berkeley said London looks to fall short of its target for new homes, which it said poses a risk to deficit reduction and the UK's prosperity.
However, Berkeley said it was well positioned to deliver its earnings and dividend guidance and optimise shareholder returns in the current market conditions, "whilst retaining sufficient capital to be flexible should suitable new investment opportunities arise".
The company reiterated its guidance for the delivery of GBP2.00 billion pretax profit over the three-year period ending April 30, 2018, having delivering the first GBP500.0 million of this in the year ended April 30, 2016.
By Hannah Boland; [email protected]; @Hannaheboland
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