London house prices look set to fall further, amid Brexit uncertainty and economic headwinds, according to one of the capital’s major housebuilders.
Berkeley Group reported bumper profits for the year ending 2018, but warned shareholders these were likely to fall by around a third in the next financial year, with property prices in the capital coming under renewed pressure.
It said these results were likely to reflect “peak” profits, due to sites in acquired between 2010 and 2013.
The firm, which focuses on the top end of the London property market, reported a 15 per cent increase in pre-tax profit, to £934.9m.
The company said it had sold 3,536 homes over the last year. This is almost 10 per cent fewer homes than the previous year, although its average selling price had increased by 6 per cent to £715,000.
Berkeley’s chairman Tony Pidgley says that while demand for new homes remained strong, the housing market in London and the South East was subdued over the last year, with some areas of development 30 per cent lower than two years ago.
He adds: “It is telling that some funders and builders are choosing to exit the [London] market when faced with the degree of risk and regulation that now confronts development in the capital where macro and political uncertainty – including Brexit – are leading to caution.”
The firm pointed out that while dealing with subdued demand in these regions, building costs had also risen by between 4 and 5 per cent, due to an increase in the cost of labour and materials.