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koala_bear

"berkeley Sees Strong Demand In London And Southeast"

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http://www.bbc.co.uk...siness-13900144

Berkeley Group has reported continuing strong demand in London and the South East of England.

The home builder said the upturn had helped raise its profits before tax for the year to April by 23.5% to £136m.

Proceeds from new shares issued in 2009 helped the firm buy £500m of new land, particularly around the South East.

Berkeley said that it now intended to return £1.7bn to shareholders over the next 10 years as it redeveloped and sold its newly-acquired properties.

Affordable warning "The 20.2% growth in earnings per share reflects the depth of demand for well-located property in London and the South East, where supply is constrained and Berkeley has the land and expertise to deliver quality homes and places," said managing director Rob Perrins.

That growing demand was reflected in a 25.5% increase in forward sales and a 30% rise in sales reservations, with investors continuing to comprise half of the orders received, with a notable contribution from foreign buyers.

The firm also said that the South East "continues to be characterised by a shortage of supply" and in the best locations "mortgage availability has not been a significant constraint to demand as approximately 50% of Berkeley customers to not require a mortgage".

Berkeley said it had acquired 3,600 plots across 2,400 locations over the last year, predominantly around the capital, increasing the value of its land bank by 13%.

"There are still two markets in the UK," said Steve McGuckin of construction consultants Turner & Townsend.

"In London, demand remains strong, buoyed by its more robust economy and overseas investors due to the weak pound.

"Outside London, where demand is far weaker and prices remain under real pressure, there are still major question marks over new build projects, especially if they are being undertaken by smaller developers.

The homebuilder also reported that building costs had remained stable during the year, in contrast to UK manufacturers, who have been seeing steadily rising materials costs.

There was a warning about affordable housing: "There are now considerably less public funds available to contribute to the financing of affordable housing, and this... will threaten the commercial viability of some schemes."

The firm also said that S106 requirements, which are obligations imposed by local authorities such as those used to fund Crossrail, were also undermining viability.

Highlights the number of cash buyers and their importance on propping up the London market and that London is "different".

Looks like those of us in London will have to wait a while longer till there are more significant drops outside London to bring sense to the market :angry:

Edited by koala_bear

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http://www.bbc.co.uk...siness-13900144

Highlights the number of cash buyers and their importance on propping up the London market and that London is "different".

Looks like those of us in London will have to wait a while longer till there are more significant drops outside London to bring sense to the market :angry:

It will happen, but it will take much longer. The South East of England has become stretched by City bonuses. People will pay a fortune to live in the 'right' postcode, even outside of London. For example, you can pay £1m for a house in Sevenoaks in Kent, when you can buy the same house in unfashionable Tonbridge for half that. That is a lot of saving for an extra 7 minutes on the train and having to live with a shabby High Street!

Of course, it is even worse in London, house prices can be dramatically different within a mile.

We need to get away from this mentality before prices in London will be affected by what is going on in other areas. If someone is looking to buy a family home in Richmond for £2m, they don't seem to care that the equivalent house is available in Guildford (hardly a s**thole!) for £1m. If the house in Guildford goes down to £500k, it would stand to reason that more people would be tempted away from Richmond, but how low does it need to go before that happens?

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  • 311 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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