Under-pressure housing investors hope for shoots of recovery in Berkeley results
The results, published next Wednesday, come as house price data looks increasingly bad for companies who sell homes.
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Your support makes all the difference.Investors across the housing sector will be looking at Berkeley Group’s results next week as the housebuilder reveals how it is coping through a property market which is far from firing on all cylinders.
Investors already have a decent insight into how the market is affecting the construction firm.
It said in March that the preceding months had been challenging with sales down 25% since the end of September compared to the previous five-month period.
“Berkeley’s full-year results should shed light on how the housing giant is dealing with a challenging market,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.
The results, published next Wednesday, come as house price data looks increasingly bad for companies who sell homes.
Recent figures from the Royal Institution of Chartered Surveyors (Rics) showed that the supply of new homes on the market reached a two-year high in May, meaning that competition for buyers is higher.
A majority of the property professionals who Rics surveyed said that they had seen drops in inquiries from new buyers.
Meanwhile house prices have also fallen for the first time in a decade.
“Recent data from Halifax has shown the first annual decline in average UK house prices since 2012, which could put pressure on Berkeley’s top line going forward,” Mr Chiekrie said.
“That means controlling costs and maintaining margins will be a key priority from here.
“There have been early signs of build cost inflation moderating, so investors will be eager to hear if that trend has continued into the new financial year.”
Analysts expect full-year profits to rise form £552 million to around £600 million when Berkeley Group reports.
“Berkeley’s London focus and higher-end product mean it offers something different from other large builders,” Mr Chiekrie said.
“And careful management of works-in-progress has fuelled expectations for net cash to come in at £375 million – a near 40% jump on the £269 million seen in the prior year.
“That should provide a big enough cushion to help smooth out future bumps in the road, but any significant miss on this front could bring shareholder returns into question.”