Housebuilder Berkeley has said London’s property market is set to strengthen amid wage growth and falling interest rates, despite its sales declining in recent months due to uncertainty ahead of the Budget.
The company, which specialises in building homes in London, said the long-term outlook was “more positive”, particularly in the UK capital.
This is despite it reporting a 4% decline in sales over the six months to the end of October, compared with the same period last year.
Berkeley said the value of sales reservations were broadly flat over the first four months of the period but then became more subdued due to speculation leading up the autumn Budget, which was delivered on November 26.
Measures announced by the Government included plans to introduce a new “mansion tax” on homes above £2 million in England and raising taxes on property income, a move likely to affect landlords.
Rob Perrins, Berkeley’s executive chair, said: “While near-term sentiment remains cautious, the long-term outlook is more positive; particularly in London, where undersupply is compounding and affordability is gradually improving with falling interest rates, improved mortgage availability, strong wage growth, and stable pricing.
“With the Budget uncertainty behind us, now is a good time for customers with the ability to buy, to do so, and take advantage of the prevailing market dynamic.”
However, the company said that interest rates were “taking too long to adjust to economic reality” which risks “hampering the pace” at which the housing market returns to growth.
Interest rates are currently at 4%, having come down from a peak of 5.25% last year.
Berkely also said that it was “critical” that reforms to the planning system “are finalised as soon as possible to reverse the dramatic decline in new housing starts over recent years”.
The business made a pre-tax profit of £254 million for the half-year, down by nearly 8% on the prior year.
