Berkeley lifts outlook despite ‘lack of urgency’ in housing market

Berkeley Group said it expects a pre-tax profit of £525 million for the current financial year.

Berkeley Group releases its annual results on Wednesday (Alamy/PA)

Housebuilder Berkeley has improved its outlook for the year despite “challenging” conditions across the housing market.

The boss of the London-listed firm said it is witnessing a “lack of urgency” in property demand and expects this to continue until interest rates start falling from their current rate of 5.25%.

Nevertheless, the group improved its guidance for the current financial year on the back of a “strong” order book.

Berkeley, which predominantly focuses on developments in London and southern England, said it expects a pre-tax profit of £525 million for the current financial year, lifting its previous target by 5%.

However, this will represent another decline in profit for the firm.

It came as the group posted a £557.3 million pre-tax profit for the year to April, which itself was down 7.7% on the previous year due to the sector slowdown.

The company said it has been impacted by interest rates remaining at high levels for longer than expected, but stressed there are “signs that the outlook is improving with inflation greatly reduced, the first interest rate cut expected later this year and a return to growth”.

Rob Perrins, chief executive of Berkeley, said: “This is a strong performance in a challenging and volatile operating environment, demonstrating the resilience of Berkeley’s business model with its focus on the country’s most undersupplied markets.

“We continue to see good levels of inquiry for well-located homes built to a high standard of design and quality but recognise that the current lack of urgency in the market is likely to remain until the long-anticipated reduction in interest rates commences.

“Berkeley continues to benefit from a strong order book and has already secured 80% of its sales for next year, underpinning today’s 5% increase in guidance.”

Shares in Berkeley were 2% lower in early trading on Wednesday.