Housebuilder Berkeley outlines profit targets and cheers "robust" London market

Housebuilder Berkeley, whose chairman is famed for his ability to call the property market, on Friday said London conditions remain “robust” but cautioned on Brexit-induced difficulties ahead.

The FTSE 100 firm said in the first four months of the financial year pricing has remained stable in the capital and the South-East.

Its forward sales order book remains above £1.8 billion. The developer said: “There is good underlying demand for new homes… supported by good availability of mortgages.”

Shares in Berkeley, chaired by Tony Pidgley and led by Rob Perrins, rose 60p to 3933p.

The firm is the latest in a string of builders, including Redrow and Barratt, to this week report encouraging trading despite concerns Britain’s looming departure from the EU would hurt pricing and demand.

Berkeley said the wider market remains constrained by high transaction costs and it is “mindful of the potential for short-term market dislocations from the current political backdrop”. It is being cautious on land investments.

However, it is confident in longer-term resilience in areas where it builds. It is working on over 20 of the largest redevelopment opportunities in London and the South-East. Big projects include in Finsbury Park and Southall.

The firm has set a pre-tax profit target of £3.3 billion over the next six years.

Profit in any one year is expected to be between £500 million and £700 million. That is lower than recent years when earnings peaked thanked to sales at luxury central London sites completing.

Halifax on Friday said the housing market is showing a degree of resilience, with prices edging up despite political uncertainty.

Average prices in August stood at £233,541. That is 1.8% higher than a year earlier and 0.3% up from the previous month.

Halifax’s house price index pointed to good demand and employment levels helping the market.

Andrew Montlake, managing director of mortgage broker Coreco, said: “For the time being at least, the economic fundamentals of low supply and a strong jobs market, along with cheap mortgage rates, are mitigating the farce playing out in Westminster.”