London market pain goes on as top builder warns on Brexit

High-end housebuilder Berkeley Homes says “macro and political uncertainty, including Brexit” is leading to some developers previously building in London to exit the sector.

Tony Pidgley, chairman of Berkeley Homes, says while his company’s completions increased in number by 16 per cent during 2017, and starts increased by five per cent, this masks very different circumstances in some areas - especially London.  

His report to shareholders on his company’s performance last year speaks of “London starts approximately 30 per cent lower than two years ago” and says “it is telling that some funders and builders are choosing to exit the market when faced with the degree of risk and regulation that now confronts development in the capital where macro and political uncertainty, including Brexit, are leading to this caution.”

Pidgley calls this a great shame “as London is a fantastic world-class city with unique attributes that will last long beyond the current hiatus which is only exacerbating the well documented under-supply.”

The company reported a healthy 15.1 per cent rise in annual pre-tax profits but says that this will not be repeated in 2018 and onwards when profits are expected to drop some 30 per cent as London property prices come under further pressure. 

“While the underlying demand for new homes remains strong, the housing market in London and the South East has remained subdued over the last year, in spite of the well documented endemic under-supply” says Rob Perrins, chief executive of the company.

There’s been a series of warnings about the London housing market in recent weeks and days.

Yesterday a report on Estate Agent Today cited Knight Frank research suggesting that landlords were backing off buying in the capital; a week earlier the same agency reported that just 3.2 per cent of all private London residential properties were sold in 2017, well below the average of 4.1 per cent for England and Wales.

And while online agency HouseSimple reported a 7.4 per cent rise in the number of homes listed across the UK as a whole in May, in London it was a more modest 5.9 per cent.