London’s biggest housebuilder Berkeley today said demand for homes in the capital is back above pre-pandemic levels but warned that supply could halve over the next few years.
Chief executive Rob Perrins said the “flight from the capital has not materialised” as he unveiled a 6.4% rise in pre-tax profits to £551.5 million for the year to the end of April.
The company, which builds about 10% of London’s new private homes, delivered 3760 units, plus 872 through joint ventures, a 42% rise on the previous year.
Perrins said demand had dropped 25% during the pandemic but this was now fully recovered at a time of very little stock.
But he added: “Supply has halved from 2015 and my worry is that it will halve again, the environment has got a lot more challenging going forward.”
He cited hollowed-out local authority planning departments and an increased burden of regulation as two factors holding back investment.
However, he added there were early signs of the cost inflation that has plagued the industry over recent years starting to subside.
The firm said it expected pre-tax earnings of around £600 million for the current year and £625 million for the two following years. It is committed to annual shareholder returns of £282 million up to September 2025. Shareholder return last year was £515.2 million.
Richard Hunter, head of markets at Interactive Investor, said: “The company’s focus on London and the South-East sets it apart somewhat from many of its competitors. Despite many brownfield projects and the company being responsible for 10% of London’s new private and affordable homes, the average selling price remains at a heady £603,000.
“Even the recent opening of the Elizabeth line is likely to have a positive impact, with Berkeley already noting an uplift in properties along the line in London and the Thames Valley.
“At the same time, London’s pre-eminence as a cultural and investment destination has also played into the group’s hands, with the return to normality resulting in a general reinforcement of urban working and living.”