2nd Dec 2016 07:29
LONDON (Alliance News) - Berkeley Group Holdings PLC on Friday said reservation levels remain 20% down on the same period the prior year, though said both revenue and profit grew in the first half of its financial year.
The housebuilder, which almost exclusively focuses on more-expensive developments in London and the South East of England, said higher property transaction costs and uncertainty relating to the Brexit vote have impacted transaction levels throughout 2016.
Berkeley said, excluding a "hiatus" around the EU referendum in the UK, reservations for the period remain 20% below the prior year, but noted that the market has "begun to adjust to the increased stamp duty and general market uncertainty".
The housebuilder said pricing remains resilient, and in overall terms, its prices have moved in line with the market. At higher price points, Berkeley said it has absorbed the impact of the rise in stamp duty charges, though said this was "more than offset by increases elsewhere".
"Government policy has generally sought to increase the level of home ownership, focusing on the demand side which has clearly been helpful outside of London, but has had a negative effect on the capital," Berkeley said.
"High transaction costs are restricting both mobility in the second hand market as well as the pace of supply and delivery of new homes in London and the south east," the housebuilder added.
The comments came as Berkeley posted a 24% increase in revenue to GBP1.41 billion for the six months ended October 31, from GBP1.14 billion a year earlier, driving a 34% year-on-year rise in pretax profit to GBP392.7 million from GBP293.3 million.
Berkeley said it sold 2,076 homes at an average selling price of GBP655,000, compared to the 2,091 homes it sold a year earlier for an average selling price of GBP506,000.
Its forward sales, however, were down since April, at GBP2.90 billion from GBP3.25 billion and its land bank declined to GBP5.90 billion of estimated future gross margin from GBP6.10 billion.
The group said it was hoping the upcoming Housing White Paper to be published by the government will overhaul the constraints placed on "getting land ready for development".
Berkeley declared an interim dividend of 100.00 pence per share, up from 90.00p per share a year earlier.
Berkeley announced a new five year target to deliver at least GBP3.00 billion pretax profit in the five years from May 1, 2016, and said it remains on track to deliver on its target of delivering GBP2.00 billion pretax profit for the three years ended April 30, 2018.
By Hannah Boland; [email protected]; @Hannaheboland
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