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Homebuilder Berkeley's first-half profit slumps on Brexit woes

Homebuilder Berkeley's first-half profit slumps on Brexit woes
FILE PHOTO: A builder assembles scaffolding as he works on new homes being built for private sale on a council housing estate, in south London June 3, 2014. REUTERS/Andrew Winning   -   Copyright  Andrew Winning(Reuters)
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(Reuters) – British homebuilder Berkeley Group Plc <BKGH.L> on Friday reported a slump in first-half pretax profit, as it sold fewer homes at lower prices in a Brexit hit real-estate market.

With less than a week to go before an election that is expected to break the impasse over Britain’s exit from the European Union, builders are weary and buyers are holding off on spending.

However, a survey from mortgage lender Nationwide showed last week that home prices rose more than expected in November, suggesting this month’s national election was not putting further pressure on the market which remains sluggish.

Berkeley, which sources three-fourth of its revenue from London, in September set a pretax profit target of 3.3 billion pounds over the six years to April 2025, with profit expected to be between 500 million and 700 million pounds in any one year.

The company, which operates primarily in London, Birmingham and the South of England, said pretax profit fell 31% to 276.7 million pounds for the six months ended Oct. 31.

The FTSE-100 company, which earlier pointed that the state of London market and the South East of England was particularly strong, said the uncertainty surrounding the upcoming general election and delay to Brexit was damaging the economy.

The company delivered 1,389 homes during the period, down from 2,027 last year, while average selling price decreased 13% to 644,000 pounds.

(Reporting by Samantha Machado in Bengaluru; Editing by Bernard Orr and Rashmi Aich)

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