Berkeley’s posted a pre-tax profit of £812 million for the year ended 30 April 2017, a 53% surge on the £530.9 million reported in the same period last year. However, forward sales slumped to £2.74 billion from £3.14 as the company warns of troubled times ahead.
Berkeley’s sold 3,905 homes at an average selling price of £675,000, up from £515,000 in 2016, reflecting the mix of properties sold in the year.
“The housing market has stabilised in London and the South East but, while Berkeley is in excellent shape with further additions to our unrivalled land bank in the period, it is an inescapable fact that we are facing a number of headwinds and a period of prolonged uncertainty,” said Tony Pidgley, Chairman of Berkeley’s Group. “Brexit and wider global macro instability impact both confidence and sentiment and will result in constrained investment levels.
“At the same time, the headwinds from changes in recent years to SDLT and mortgage interest deductibility, coupled with the planning environment’s increasing demands from the combination of Affordable Housing, CIL, Section 106 obligations and review mechanisms, are resulting in reduced levels of new housing starts in London.”
For Berkeley, this leads to greater uncertainty around the timing of delivery of homes from its land bank. Notwithstanding the uncertainty, Berkeley’s said that its strong forward sales position and land bank provide sufficient visibility to reiterate its previous guidance of delivering at least £3.0 billion of pre-tax profit in the five years beginning 1 May 2016, assuming prevailing market conditions persist.