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- Transaction volumes in London – the number of houses being bought and sold – have dropped 18% since last year, according to housebuilder Berkeley,
The group posted strong profits but warned of a tough outlook next year, as Brexit and inflation bites.
LONDON – Transaction volumes in London, the number of houses being bought and sold, have dropped 18% since last year, according to housebuilder Berkeley.
The group, which mostly develops sites in London, said in an interim results statement that pre-tax profits rose 36% to £533.3 million in the six months to October 31, selling 2117 homes for an average of £719,000, much higher than last year’s average of £655,000.
The strong results meant the company revised its pre-tax profit guidance to £3.3 billion from £3 billion, but it said 2017/18’s results would be a “peak” before returning to normal returns in 2018/19.
Berkeley’s caution reflects wider concerns about the capital’s housing market, where decades of runaway price growth is seeing affordability stretched to breaking point. Estate agents Savills predicts London house prices will dip 2% next year despite rising nationally.
The firm said factors driving the slowdown in transactions included stamp duty hikes, uncertainty surrounding Brexit, and a tax change which means landlords from 2020 will no longer be able to deduct mortgage interest costs when they calculate taxable profits.
Chief executive Rob Perrins said: “There remains good underlying demand for property in London and the South East, but the combination of uncertain UK economic and political outlook and high property taxation continues to mean customers are more circumspect and inevitably purchasing later in the development cycle.
“Brexit uncertainty and concerns over growth and inflation, coupled with the changes to SDLT (stamp duty land tax) and mortgage interest deductibility, continue to impact the market.”