Buyers need confidence in economy for home sales to improve – Berkeley Group
The firm said in its latest trading update that ‘inquiries are at a consistently good level’.
Berkeley Group has said home sales are improving but warned buyers need confidence that interest rates will fall and the economy will stabilise.
The housebuilder said in its latest trading update that “inquiries are at a consistently good level” and it has seen a “modest improvement in sales reservations”.
It said that for sales rates to improve “there needs to be greater confidence in the trajectory of interest rate reductions and wider economic stability”.
Berkeley, which specialises in building homes in London, says it is on track to deliver £975 million in profit over the next two years, expecting £525 million in 2025 and £450 million next year.
It expects its cash reserves to drop from £474 million to around £300 million this year due to shareholder payouts and £180 million in land payments.
The firm said it is “hugely encouraged” by the Government’s plans to build 1.5 million homes by 2029.
Berkeley also told of concern over the impact of regulatory changes such as the new building safety levy, to be paid by developers on new developments.
It said the changes “place significant pressure on the delivery of new homes”.
A spike in inflation caused the Bank of England to raise interest rates and that made it more expensive for people to take out a mortgage, and in turn hammered the number of new homes companies built and sold.
Interest rates began to fall last summer from their peak of 5.25%, and currently sit at about 4.5%, with further cuts expected this year.
Official data in December showed London saw housing starts fall 60% in the year to June versus the previous 12 months.
