The Berkeley Group Holdings PLC (LON:BKG) said underlying demand for new homes has been “good” but the wider market remains constrained by high transaction costs and Brexit uncertainty.
In a trading update ahead of its annual general meeting, the housebuilder said market conditions in London and the South East remained “robust” in the first four months of the new financial year – consistent with the full-year results in June.
The company said pricing has remained stable and its forward sales position remains above £1.8bn.
“There is good underlying demand for new homes built to a high quality that are well located and properly priced to meet the local housing need, supported by good availability of mortgages,” the company said.
“The wider market remains constrained by high transaction costs and the uncertainty in the macro-political and economic environment.”
The group expects its cash level at the half-year to remain at a similar level to the full-year position of £975mln as it invests in developing 20 residential sites in London and the South East.
Berkeley is targeting £3.3bn of pre-tax profit for the six years to 30 April 2025, with profit in each year ranging from £500mln to £700mln.
“While very mindful of the potential for short-term market dislocations from the current political back-drop, we remain steadfast in our belief in the long-term resilience and attraction of our markets of London, Birmingham and the South East,” it said.
“We continue to work with our supply chain to assess and address the risks associated with disruptive Brexit to the extent this is possible, including accelerating the delivery of certain materials and components.”
As previously announced, Berkeley has extended its £280mln annual shareholder returns programme to 2025, with a targeted pre-tax return on equity of at least 15% over the period.