Housing demand down 20% on last year after Brexit vote and tax increases, developer Berkeley says

One of UK’s biggest housebuilders says Brexit referendum and Government’s “extraordinary attack on landlords” has hurt market

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The Independent Online

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”.

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.

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.

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.

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.

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.

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.