Berkeley Group Holdings PLC (LSE:BKG) said the value of sales for its London and south-east target market has dropped by around 25% since the end of September, but it remains on course to hit this year’s profit target of £600mln.
Beyond that, the housebuilder reduced its aggregate profit forecasts for the next two years to £1.05bn from £1.25bn.
House prices have started to turn down in the past three months, with the mortgage chaos that followed ex-PM Liz Truss’s mini-budget adding to the problems.
Rob Perrins, Berkely's chief executive, said overall sales in the six months to end-October 2022 were ahead of the previous year, with prices remaining firm in spite of the difficult economic conditions.
Overseas buyers make up much of the company's customer base shielding it to an extent from the cost-of-living squeeze, but Berkely warned it is having to reposition itself until ‘the conditions for growth’ are present and to deal with tighter regulation and a lack of brownfield sites.
“Future investment decisions will need to take into account the increase in corporation tax of 6%, the 4% RPDT and the proposed additional building safety levy designed to raise a further £3 billion from the industry,” the FTSE 100-listed company said in its half-year report, noting that London is suffering from a lack of investment in infrastructure and affordable housing.
Profits for the half year were £285mln, down 2% from a year earlier, though net cash rose by £74mln to £343mln.
Plans for shareholder returns are unchanged, added the statement.
Berkeley shares rose 0.5% to 3,818p.