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What house price freeze? Profits at this London-focused housebuilder have jumped more than 50 per cent

It seems rumours of the demise of the London housing market were greatly exaggerated, after Berkeley Group, one of the capital’s biggest housebuilders, reported a 53 per cent jump in pre-tax profits.

The figures

The housebuilder said pre-tax profits rose 53 per cent to £812.4m in the year to the end of April, from £530.9m the year before.
Revenues rose 33 per cent to £2.7bn, while net cash grew to £285.5m, up from £107.4m last year.
But there were some signs of shakiness: the company’s forward sales fell to £2.7bn, 15.7 per cent down on the same time last year, while dividend per share fell 2.6 per cent to 185p.
Still – it said it was on target to deliver £3bn of pre-tax profits between May 2016 and May 2021.
Shares in the company rose three per cent to 3,325p in early trading – despite analysts having hoped for an even bigger, 58 per cent, rise in profits.

Why it’s interesting

In the aftermath of the financial crisis, London’s housing market burgeoned. However, since last year, when the EU referendum result came just months after punishing new rules around stamp duty on buy to let homes were introduced, that stellar growth has slowed, causing house builders to wring their hands.
Back in March Berkeley Group declared the slowdown was over, saying the market in the South East had “stabilised”, and today’s figures back that up.

But question marks remain over the growth of the capital’s housing market. Figures published last month by Your Move showed prices in the capital had fallen 0.1 per cent between March and April, while rival house builder Crest Nicholson has warned uncertainty after the General Election may put buyers off moving into the market in the short term.
Even Berkeley Group admitted today that confusion following the EU referendum wasn’t going away.

“Uncertainty over Brexit remains and this, coupled with the impact of high SDLT [stamp duty] and multiple demands from the planning system in London, mean that supply in our capital will remain constrained and not reach the levels required,” said Rob Perrins, the company’s chief executive.

(Source: City AM Wednesday 21 June, 2017)

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