Shares in Berkeley Group Holdings PLC (LSE:BKG) climbed 5.2% to 3,626p as the housebuilder delivered results ahead of its previous guidance and used its annual results to press the government for further housing reforms.
The FTSE 250-listed group confirmed that it will step up share buy-backs after prioritising cash generation and existing developments over new land purchases in a housing market seen as no longer offering adequate returns.
Berkeley reported annual pre-tax profit declined 15% to £451 million in the year to 30 April and net cash came in at £363 million, having two months ago guided to around £450 million of pre-tax profit and net cash of about £300 million.
Housing completions rose 1% to 4,076, ahead of consensus forecasts, although average selling prices fell 8% due to effects from a different sales mix.
Operating margin slipped to 18.7% from 20.1% as newer developments generated lower returns in a market where house price inflation has stalled.
Berkeley launched its first rental units in the year at two sites, with one more starting since April and a further three in the year ahead.
Against a backdrop of changes at 10 Downing Street, Berkeley urged the government to reset stamp duty, speed up planning decisions and reform housing regulation, reiterating its warning that lengthy planning delays, stamp duty surcharges and regulatory burdens were deterring investment and preventing major regeneration projects from proceeding.
Executive chair Rob Perrins said it now takes at least eight years to bring a new apartment building from acquisition to completion in London, compared with five years a decade ago.
He said further intervention will be needed if ministers are to hit housing targets, with London building less than 10% of the homes it needs despite recent policy changes designed to boost supply.
In April, Berkeley announced a strategic pivot, saying that it would pause new land purchases and slow investment as it adapts to a weaker housing market and rising regulatory pressures.
Perrins said the group's "prioritisation of cash generation and disciplined capital allocation will allow us to continue with shareholder returns, increasing the cadence of share buy-backs where the share price is below net asset value per share."
The company spent £233 million repurchasing shares during the year at an average price of £37.10.
Operationally, forward sales continued to soften, with cash due on future completions falling to £1 billion from £1.4 billion a year earlier as legal completions outpaced reservations.
Berkeley said customer enquiries remained "encouraging", but buyers without an immediate need to move continued to show little urgency.
Shares in other mid-cap and blue-chip housebuilders rose too, with Persimmon PLC (LSE:PSN) rising 2.4%, Vistry Group PLC (LSE:VTY) 2.4%, Bellway PLC (LSE:BWY) 2%, Taylor Wimpey PLC (LSE:TW.) 1.7% and Barratt Redrow PLC (LSE:BTRW) 1.2%.
Broker Stifel said: "There is upside risk from a faster London market, which may come in due course, or an improvement in the planning system but the latter is more likely outside London. Downside risk would come from further weakening in London demand and/or easier planning not materialising."
** UPDATE: Adds details, shares, and broker comments **
