BERKELEY Group, the housebuilder that is slimming down to focus on building homes in urban areas that need regeneration, said yesterday that demand for houses had fallen.
However, the company said that the market was “acceptable” and had merely reverted to “normal” after the boom conditions of two years ago.
Roger Lewis, chairman, said: “If you have the right product and present it and price it well, it will sell. That is the sort of market that Berkeley thrives in.”
Mr Lewis said that he could see no sign of a looming meltdown in the housing market and was critical of other housebuilders that had “talked down” the market.
The regeneration specialist said that five interest rate rises had affected demand for homes, particularly deterring new entrants to the market. However, it said that the fundamentals of the market were still strong, with forward sales slightly up at £948 million, from £945.3 million a year earlier.
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Berkeley completed the sale of Crosby Homes yesterday as part of its restructuring. The sale will have a dramatic impact on group profits next year.
Mr Lewis said that he was happy with current consensus forecasts, which said that pre-tax profits would be between £155 million and £165 million.
Pre-tax profits for the full year to the end of April were £202.9 million, compared with £229.8 million the year before.
Berkeley’s stated strategy is to maximise returns to shareholders, rather than concentrate on the profit and loss account. The company said last year that it would return £12 a share to investors over period of six years. A £5 payment was made in December 2004 and the group confirmed yesterday that it was on track to return a further £2 in December 2006. The remaining payments are pencilled in for 2008 and 2010.
Despite cutting the turnover of the business substantially, Berkeley has continued to increase its land bank — the key to housebuilders’ long-term success. The group has replaced more units than it built on in the past year. It now controls 27,278 plots with an estimated gross margin of £1.85 billion.
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Land prices have stayed competitive this year and Berkeley said that it had agreed deals on only 19 new sites this year, which were affordable within its strict acquisition criteria.