Berkeley warns of uncertain short-term outlook caused by Brexit

HOUSEBUILDER BERKELEY Group’s first half pre-tax profit fell 26 per cent as it warned about an uncertain short term outlook as people put off house purchases ahead of Brexit.

The group’s pre-tax profit fell to £401m in the six months to October 31, from £540m. Berkeley said its short-term outlook was uncertain because of the ongoing Brexit negotiations and a number of other headwinds.

“This uncertainty affects sentiment and confidence which has a consequential adverse impact on investment levels and transaction volumes with a number of developers withdrawing from these markets,” the company said.

UK house prices, which have increased for most of the past 25 years, have softened in the past year as the Government struggled to find its way through Brexit talks and speculation mounted that thousands of financial and other jobs could leave the country.

The days of house price rises hugely outpacing inflation won’t be returning any time soon, even if Britain and the EU strike a Brexit deal, the vast majority of economists polled by Reuters said.

Berkeley reiterated that Britain’s housing market lacked urgency and was constrained by high transaction costs. The company delivered 2,027 homes in the first half, down from 2,190 last year. However, Berkeley raised its full year pre-tax profit forecast by more than 5 per cent.

Analyst George Salmon at Hargreaves Lansdown said: “These are strong results from Berkeley. Upgraded profits and a balance sheet that looks even more resolute has given the group the confidence to promise a steady flow of shareholder returns all the way out to 2025.”