Berkeley adds to the misery in housebuilding sector

Permalink: Berkeley adds to the misery in housebuilding sector
by Kay Murchie

Berkeley Homes and St George owner Berkeley Group have this week added to the gloom in Britain’s housebuilding sector.

The company warned that business is ‘crumbling’ and that reservations in the last 4 months were down 20% on usual levels.

The city regeneration company, which is responsible for schemes such as Chelsea Bridge Wharf and the Battersea Reach development, said confidence among prospective buyers ‘has been weakened by the deterioration in the credit markets’.

As a consequence, this resulted in expensive mortgages and deterred househunters seeking a new home. Furthermore, property price falls has meant that buyers are in ‘wait and see mode’.

The group said it expects full-year results to be at the higher end of City analysts’ forecasts, adding that its forward sales for this year and beyond are already ‘well in excess’ of the levels of forward sales in 2007.

However, the group said the decline ‘must be balanced with the favourable market conditions upon which Berkeley capitalised in the first half of the year’.

Last week, Bovis Homes announced lower 2007 profits and warned that house sales for the current year are already down 20%. In addition, housebuilder Redrow posted a 35% fall in half-year pre-tax profits and said the markets in which it operates remained ‘clearly’ challenging.

However, in contrast, housebuilders Persimmon posted record profits for last year while Barratt Developments said half-year, pre-tax profits increased by 10% to £194.6 million.