London's biggest housebuilder sees post-Brexit slump
Berkeley Group Holdings Plc, London's largest publicly traded homebuilder, said last year's Brexit vote caused reservations to decline in the past seven months, though fiscal 2017 earnings will still be at the top end of analysts' estimates.
Home reservations from last August to February fell 16pc compared with the year-earlier period, Berkeley said in a statement last Friday. While the market in London and the south east of England has now stabilised, the uncertainty surrounding Brexit resulted in a 30pc drop in the construction of new homes in the UK capital during the period, the company said.
"The reduction in reservations is across all price points and reflects the ongoing impact of both Brexit uncertainty and the changes in recent years to stamp-duty tax and mortgage-interest deductibility," Berkeley said.
London home prices have surged about 86pc since 2009, meaning it now costs buyers 14.2 times their annual gross salary to purchase a property, the highest level on record and more than double the rate for the UK as a whole, according to Hometrack.
Developers are sitting on a record number of unsold homes after sales of luxury properties under construction in the UK capital dropped to the lowest level since 2012, according to data compiled by Molior London.
Berkeley rose as much as 5.9pc in London trading, the most since December 2 last. The company's shares have gained about 11pc this year.
Elsewhere, Rightmove Plc reported that average London property asking prices rebounded to an all-time high this month, boosted by areas on the periphery of the UK capital. The average price of a home coming to market climbed to Stg£649,772 (€752,000) in March, rising 1.4pc from a month earlier, the property website said last Monday.
The best-performing areas were Ealing and Harrow, while Kensington and Chelsea saw the biggest declines.
London's housing market underperformed the rest of the country during 2016 as a combination of stretched affordability, Britain's vote to leave the European Union and tax increases on investors weighed on demand.
"It is this trend of buyers looking further afield for value that is pushing up demand and therefore prices in many outer boroughs," said Rightmove director Miles Shipside.