UK housebuilder Berkeley Group saw its profit for the first half of 2019 fall over 30 per cent as Brexit-based uncertainty continued to hit the housing market.
Profit at the company fell from £401.2m in 2018 to £276.7m this year, a fall of 31 per cent.
Revenue nearly halved, dropping to £930.9m from £1.6bn in 2018.
The company said that these reductions were expected as it had finished a number of central London developments acquired between 2009 and 2013.
Berkeley added assurances that the company remained well on track for their six-year profit target of £3.3bn, which was announced in September.
The firm delivered 1,389 homes in the period, more than 10 per cent of London’s new private and affordable housing.
Net cash at the group also increased to £1.06bn, up from £975m in April this year.
Why it’s interesting
Average selling prices for the period fell by nearly 13 per cent to £644,000, which may be as a result of the group diversifying its portfolio away from London.
According to David Madden, markets analyst at CMC Markets, the figures “paint a picture of cooling in the house building sector.”
He added: “Political uncertainty on account of the UK’s planned exit from the EU, combined with high levels of personal debt has prompted some potential house buyers to hold-off purchases.
“At the four-month update in September, the company predicted it will post £3.3 billion in pre-tax profit over the six years until April 2025, so things are still looking positive in terms of the bottom line. That outlook was reiterated this morning, which should assist investor confidence.”
What Berkeley said
Chief executive Rob Perrins said:
“This has been a good start to the year for Berkeley. We have a clear long-term strategy to deliver strong, sustainable, risk-adjusted returns for our shareholders, while transforming highly complex brownfield sites to produce fantastic outcomes for all our stakeholders, including a high proportion of London and the South East’s much needed new homes, across all tenures.
“We remain alert to market risks with a General Election next week and the delay to the UK’s proposed exit from the European Union prolonging the uncertain operating environment of the last three years.
“This is damaging to our economy and London where fewer developers are prepared or able to accept the high operational risk of bringing forward new homes, with supply falling as a consequence.”