Business reporter(wp/es):
London's housing market lacks “urgency” as a cluster of headwinds dulls the market, housebuilder Berkeley warned on Wednesday.
The company, founded by housing market sage Tony Pidgley, is seeing subdued conditions in the capital although it stuck to its most recent profit guidance in its latest trading update.
Berkeley blamed a combination of factors, exacerbated by Brexit and high stamp duty costs, for the malaise, hampering a “functioning” housing market.
The firm said: “In essence, this is a market that lacks urgency and London remains constrained by high transaction costs, restrictive income multiple limits on mortgage borrowing and prevailing economic uncertainty, accentuated by Brexit.
“These headwinds affect all segments of the market from home movers to downsizers and investors alike. A functioning housing market, where good new development can deliver much-needed additionality across all tenures, requires conditions for growth and low barriers to entry which are currently absent from the housing market in London and the South-east.”
Its comments came as rival Barratt Developments posted a 9% rise in pre-tax profits to £835.5 million for the year to June, despite “continued headwinds” in the high-end central London market.
Although Barratt has not bought any sites in central London since 2014, chief executive David Thomas said parts of the market, such as Nine Elms, were still struggling with oversupply.
Barratt instead concentrated on more-buoyant markets on the outskirts of the capital.
It sold 17,579 homes last year, the highest for a decade.
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