London homebuilder says market recovery is near amid Labour’s housing push
Berkeley Group said the property market was ‘close to the point of inflection’ amid a recovery in house prices.
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Your support makes all the difference.Berkeley Group has bet that the UK’s housing market is close to making a comeback, after buying its first new sites in more than two years.
The housebuilder bought a site in Berkshire where it plans to build 220 homes, as it heralded a potential “new era for homebuilding” as a result of policies by the Labour Government.
Chief executive Rob Perrins said the market was “close to the point of inflection” where it becomes more attractive to investors.
The scale of opportunity for a new era of homebuilding is substantial
He said: “We have already experienced notable traction in the planning system in recent weeks brought about by the change in tone ushered in by the new Government.
“This positive intent will lead to the delivery of more homes provided all levels of government now work with developers to deliver economically viable planning consents.”
Homebuilders have endured a brutal period brought about by high mortgage rates in recent years.
Berkeley, which is listed on the FTSE 100, reported that profits fell 7.7% to £275 million in the half-year to October.
Labour has said it wants to build 1.5 million homes over the next five years, and has announced plans to reform the planning system to free up more development.
That appeared to be partially undermined by the autumn Budget, when a raft of tax and spending hikes raised fears of fresh rises in inflation.
Berkeley specialises in building homes in London, an area which has taken a particular hit because of higher borrowing costs and new fire safety rules.
The capital saw housing starts fall 60% in the year to June versus the previous 12 months, according to official data.
The risk that inflation and mortgage rates stay higher for longer means we recently revised down our UK house price forecasts for the next three years
Despite the group’s praise for Labour’s pro-building policies, it wrote that “heightened” inflation risks had counterbalanced improvements in the market of late.
Nonetheless, it wrote: “The scale of opportunity for a new era of homebuilding is substantial.”
Separately, an index showed the average UK house price hit a new record high of £298,083 in November, reinforcing Berkeley’s forecast of a market resurgence.
Property values rose by 1.3% month-on-month, marking the fifth increase in a row, Halifax said.
Tom Bill, head of UK residential research at Knight Frank, said some recent improvements had come as buyers try to get ahead of a stamp duty increase next April.
He added: “The risk that inflation and mortgage rates stay higher for longer means we recently revised down our UK house price forecasts for the next three years.
“Growth will feel more sustainable once the economy is heading decisively in the right direction.”