Housebuilder Berkeley set to update on city exodus

Housebuilder Berkeley is set to reveal whether the much-hyped exodus from city centres has been overplayed at its full-year results on Wednesday.

The company had held back on some new developments in the year, to wait for lockdown restrictions to ease.

But the decision may have backfired, with long delays now facing the construction sector and the prospect of price rises on raw materials potentially affecting the group and industry more widely.

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Suppliers have been reporting long delays at ports, and raw materials, particularly timber, rising in price as pent-up demand from the pandemic outstripped supply.

Housebuilder Berkeley Homes is expected to dampen speculation over the demise of city-centre living. Picture: contributed.
Housebuilder Berkeley Homes is expected to dampen speculation over the demise of city-centre living. Picture: contributed.

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The housing sector has managed to hold up well during the pandemic, thanks in part to the prolonged stamp duty holiday announced by the UK government.

Analysts at JP Morgan certainly believe that recent worries of "de-urbanisation" alongside the ongoing cladding crisis engulfing the sector have been overplayed and that profits could be at the top end of current guidance.

A consensus of analysts predict pre-tax profits will come in at £516 million, up from £503.7m a year earlier but still well down on the £775.2m recorded in 2019.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, also pointed out that the cost of materials rising may not be quite so challenging for Berkeley due to its properties being at the premium end of the market.

He said: "That's a headwind facing the whole industry, but Berkeley may actually be better insulated than many. Its relatively high price point and specialism in complex sites mean materials account for a smaller proportion."

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