This content is not available in your region

House-builder Berkeley's profit slides amid mounting Brexit worries

Access to the comments Comments
By Reuters

(Reuters) – Berkeley Group’s <BKGH.L> first-half pretax profit fell 25.7 percent, the British house-builder said on Friday, while warning about an uncertain short-term outlook as people put off house purchases ahead of Britain’s exit from the European Union.

Pretax profit fell to 401.2 million pounds in the six months ended Oct. 31, from 539.9 million pounds a year earlier.

Berkeley said its short-term outlook was uncertain because of the ongoing Brexit negotiations and a number of other unspecified headwinds in its London and the South East markets.

“This uncertainty affects sentiment and confidence which has a consequential adverse impact on investment levels and transaction volumes with a number of developers withdrawing from these markets,” the company said in a statement.

UK house prices, growing for most of the past 25 years, have softened in the past year as the government struggled to find its way through Brexit talks and speculation mounted that thousands of financial and other jobs could leave the country.

The days of London house price rises hugely outpacing inflation won’t be returning anytime soon, even if Britain and the EU strike a Brexit deal, the vast majority of economists and analysts polled by Reuters said in November.

Berkeley reiterated on Friday that Britain’s housing market lacked urgency and was constrained by high transaction costs and limits on mortgage borrowing.

The company delivered 2,027 homes in the first half, down from 2,190 last year.

Berkeley, however, raised its full-year pretax profit forecast by more than 5 percent.

(Reporting by Tanishaa Nadkar and Noor Zainab Hussain in Bengaluru; Editing by Sai Sachin Ravikumar)