LONDON — Housebuilder Berkeley says adverse conditions in London mean housebuilding starts are down 30% on 2015.
The builder, a constituent of the FTSE 250 index, said in a trading update on Wednesday that it had traded according to expectations over the last four months and was on course to post £3 billion pre-tax profit in the 5 years to April 2021.
However, it said that stamp duty — which was hiked last year — Brexit uncertainty, and changes to tax relief on mortgages were damaging the capital’s housing market.
The statement said: “While Berkeley is in excellent shape, the London market continues to be adversely impacted by both, uncertainty around the terms and implications of Brexit and, the changes in recent years to SDLT [stamp duty] and mortgage interest deductibility.”
It said London’s planning environment “remains challenging” and is “still yet to reflect the current market conditions.”
“As a consequence, new construction starts in London remain some 30% lower than 2015,” the statement added.
Figures from property firm JLL published in March found the number of new houses breaking ground in central London dropped 75% this year as builders pull back in the face of rising costs and falling house prices.
Shares in Berkeley were down just over 3% at 8.28 a.m. BST (3.28 a.m. ET):
Meanwhile, shares in the UK’s largest housebuilder Barratt Developments were down over 4% after the company posted full-year results which saw pre-tax profits rise 12% in the year to June but house-building volumes remain flat.
The group hit pre-tax profit of £765 million on revenues of £4.56 billion, up 9.8% from the same period in 2016.
But house-building volumes rose only 0.4% to 17,935 during the year so far, and the group predicted only “modest” growth in the coming year.
Shares were down 4.09% at 8.29 a.m. BST (3.29 a.m. ET):