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EU Vote Run-Ups Sees Berkeley Home Reservations Drop

Renowned luxury homebuilder Berkeley has reported a drop of 20% in new home reservations during the five months ahead of the upcoming EU referendum.

The homebuilder confirmed that the basic demand for new houses remained strong, even though the pretax profit came in at £531m, a reduction from the £540m reported in 2015.

Despite this weaker performance, Berkeley representatives said that the firm was still on target to deliver £2bn in aggregate pre-tax profits over the three years to April 30, 2018.

Rob Perrins, Berkeley managing director, said that sales were down by 4% for the year in its entirety, the market for Berkeley homes has gone down by around 20% in the five months to May of this year. As the EU referendum draws near, no new London launches have taken place during the same period.

Mr. Perrins said that this situation has had a more marked impact on the upper end of the housing market, which has also been affected by higher taxes on transactions and the shift in policy against investors who purchase property for buy-to-let purposes.

He added that activity were focused on the periods after 2017/18. Some new launches are being planned for later in 2016, after the uncertainty over the EU Referendum passes.

Figures confirm that in the year to April 30, 2016 Berkeley sold 3,776 new homes across London and the South of England, compared to 3,355 in 2015. The average selling price was £515,000, down from £575,000 compared to the year before.

Specialists in Construction Insurance

The decrease in average sale price was apparently due to a mix change with Berkeley finishing two student developments in 2016, one in London and one in Bath. Each project featured 638 units.

During the last year, Berkeley has acquired 12 new ones, each one containing around 8,600 plots. It has also obtained nine new planning consents and 21 planning consents that underwent revision.

These additional investments increased the company's land holdings to 42,858 plots, with a future estimated gross margin £6.1bn. This achievement would surpass last year’s total of 37,473 plots and £5.3bn a year ago.

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