By Scott Kanowsky
Investing.com — Shares in Berkeley Group Holdings PLC (LON:) rose to near the top of the pan-European on Tuesday after the U.K. homebuilder said it expects forward sales to come in above the level hit during its previous financial year.
In a trading statement, Berkeley said forward bookings are estimated to be “marginally” greater than the £2.17B held on April 30, when the company released its annual results. “Ongoing resilience” in British housing sales, along with second half weighting of revenue and profits, were cited as the key drivers behind the projected uptick.
Meanwhile, the firm announced it was on track to meet its short-term profit guidance despite a recently “volatile” trading environment. Pre-tax income is seen at £600M in 2023 and £625M in the following fiscal year.
“The good level of demand continues to support pricing above business plan levels, which is sufficient to cover cost increases on a blended basis across Berkeley’s developments,” Berkeley said.
Berkeley previously flagged in June that uncertainty is “ever increasing” as supply chain shortages and the war in Ukraine place upward pressure on prices and the broader economy.
Concerns remain that these macroeconomic headwinds, as well as increasing mortgage rates, may weigh on future housing sales in Britain.
HSBC analysts slashed their rating for the sector late last week, warning of a potential 20% slide in demand this autumn and a 7.5% decline in home prices. Elsewhere, property website Rightmove (OTC:) has also predicted a slowdown in U.K. home prices in the second half of 2022.
But in a note, analysts at Investec called Berkeley’s latest update “reassuring,” adding that it should give wary investors some comfort about the U.K. housing market heading into the key autumn selling season.
Shares in several Berkeley peers, including Hargreaves Lansdown PLC (LON:), Bellway PLC (LON:), Persimmon (LON:), and Barratt Developments (LON:), also surged into the green.