Berkeley warns London housing problems will hurt UK economy as sales crash 20%

Capital will 'fall well short of its targets for new homes' after tax hikes, housebuilder cautions

Ben Chapman
Tuesday 06 September 2016 12:22
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Berkeley founder Tony Pidgley said former Chancellor George Osborne's property tax hikes threaten the UK economy
Berkeley founder Tony Pidgley said former Chancellor George Osborne's property tax hikes threaten the UK economy

Housebuilder Berkeley Group said the property market remained under pressure in August following the Brexit vote as it announced sales had crashed by 20 per cent. The group also launched a scathing attack on government housing policy, which it said had taken its toll on the London market and risked damaging the national economy.

The South East-focused firm said the sales drop was particularly pronounced during a “hiatus” surrounding the EU referendum, but said reservation levels had begun to bounce back in August.

Berkeley said there had been a spike in cancellations following the vote to leave the European Union, but said prices remained “resilient”. Earlier this month Nationwide said severely restricted supply continued to keep prices high despite the relative lack of buyer in the market after Brexit.

Berkeley said: “Throughout 2016, site visitor numbers and inquiries have been at similar levels to the same period last year, demonstrating the strength of underlying demand, although customers are taking longer to commit.”

In April George Osborne increased hiked stamp duty on higher value homes and buy-to-let purchases, a move Berkeley said will damage the UK economy.

The capital would “fall well short of its targets for new homes”, Berkeley said in it statement.

“This is not just a problem for business and ordinary people in the capital but for the country as a whole. London is the engine of our national economy and the principal driver of fiscal revenues,” it added.

“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.”

Berkeley held its forecast of £2 billion profit in the three years to April 2018, leading its share’s to rise 3 per cent this morning. However, the stock has slumped 20 per cent since the Brexit vote, leaving it languishing at the bottom of the FTSE 100.

Tony Pidgley, the company’s founder, added fuel to concerns over soaring corporate pay this month after he landed a huge £23.3m payday in 2015 – with the potential for another £26m bonanza for this year.

The results contrasted starkly with fellow housebuilder Redrow, which delivered another set of record annual results, shrugging off uncertainty around the UK’s Brexit settlement to predict an “excellent” property market in 2017.

The Flintshire-based firm reported a 23 per cent surge in pre-tax profits to £250 million for the year to 30 June after revenues rose 20 per cent to £1.38 billion, with average selling prices of homes up 7 per cent to £288,600.

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