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Berkeley, the London-focused housebuilder, underlined the strength of the property market in the UK capital with a 58 per cent rise in full-year pre-tax profits and a 40 per cent increase in the number of houses it sold.
Although a Nationwide survey on Thursday showed UK house prices had fallen more than expected in June, Berkeley said it remained confident that a shortage of new homes combined with low interest rates and continued investment from foreign buyers would continue to sustain demand in the capital.
Nevertheless, Rob Perrins, managing director, said that prime property prices had plateaued as a result of changes to the UK tax regime this year and the lack of a “feelgood factor” among buyers.
“There’s a pause for breath because of the lack of certainty,” said Mr Perrins. “The tax changes have definitely had an effect; they have made people question whether they want to invest in the UK.”
In March, George Osborne raised from 5 to 7 per cent the stamp duty payable on sales of property above £2m, and introduced a 15 per cent charge on properties bought and sold through offshore corporate vehicles.
More than 40 per cent of Berkeley sales go to foreign buyers, and the group has recently opened an office in Hong Kong.
The company said full-year profits climbed 58 per cent to £214.8m for the year ended April 30, with a 40 per cent rise in the number of houses sold to 3,656 homes, up from 2,544 the year before. The average selling price was £280,000, up from £271,000 in the prior year. Revenue jumped by 40.2 per cent from £742.6m to £1,041.1m in the year.
Berkeley, which has outperformed rival housebuilders by focusing on more expensive homes in central London, has snapped up key sites throughout the capital, and said it would meet its objective of growing the value of its land bank to £3bn by April 2014, a year earlier than originally intended.
Key deals include the £150m purchase of the former News International headquarters in Wapping, the former home to the Sun, the Times, the Sunday Times and News of the World.
The group said it was well-positioned to meet its previous target of doubling its pre-tax profit from £110m to £220m by April 30th 2013, two years earlier than planned. Its first targeted dividend repayment is expected in September 2015.
Charlie Campbell at Liberum Capital issued a buy note and said the numbers bode well for rival housebuilders. “The company is sticking with its guidance of making £220m pre-tax profit in April 2013, but this looks a little conservative as forward sales at the end of April are up 30 per cent. Strong London and south east markets should also be enjoyed by Barratt Developments and Taylor Wimpey.”