Berkley reports amid growing signs of London property market woes
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Half-year results from housebuilder Berkeley will be in the spotlight next week amid further signs of a slowdown in the London property market and in light of the Budget stamp duty give-away.
The group, which is focused on London and the South East, will be eyed closely for its views on falling demand for high-end homes in the capital, as well as any early signs of a boost from the move to scrap stamp duty for first-time buyers on the first £300,000 of properties worth up to £500,000.
There has been contrasting views among builders on the housing sector in recent weeks, although most agree that there is a clear slowdown in London - Berkeley’s main market.
Rival London builder Telford reiterated in its recent interim results that Brexit uncertainty and tax changes were knocking demand for higher priced homes in London, but said this continues to be offset by an ongoing shortage of homes in the capital.
Berkeley said in September that it was in “excellent shape” despite warning that Brexit worries were compounding already difficult conditions in the capital after recent stamp duty tax hikes and planning woes.
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It said that new construction in London remained 30% lower than 2015 levels due to a challenging planning environment.
But Berkeley also confirmed that annual profits were on track to be “at least as strong” as the previous year as sales prices for the first four months of its year were above its business plan.
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Friday’s figures are also set to see the group confirm that it expected to make at least £3 billion of pre-tax profit by 2021.
Analyst Chris Millington at Numis said there was scope to increase this target.
He added: “In our view, the main focus of the update will be Berkeley’s assessment of current market conditions and whether the changes to stamp duty in last week’s Budget have had any noticeable impact on the demand profile.”
Berkeley’s interims also come after it faced a showdown with investors over pay plans with top bosses.
The plans were passed at its annual general meeting in September, but 16% of shareholders voted against the plans amid a backlash over a £92 million windfall for six executives thanks to a long-term shares bonus scheme set up in 2011.