Housebuilder Berkeley recouping rising costs from booming property market

Berkeley Group said that it is recouping the booming cost of building homes by selling them more expensively.

The business said that it was on track to meet guidance, but was facing rising costs.

But like many of its peers in the building sector, the company has been able to offset spiralling costs because house prices are booming.

According to the latest figures from Halifax, the price of an average house in the UK grew by nearly 11% in the year to February, reaching £278,123.

“Berkeley has continued to trade robustly since its half year, with the value of underlying sales reservations remaining slightly ahead of pre-pandemic levels,” the business said.

“Cancellations are at normal rates and sales pricing is sufficiently ahead of business plan to absorb construction cost increases.”

Earnings are still on track to meet guidance in the year ending April 30, the business said, and it is still confident of the guidance for the following three years.

Forward sales are expected to be above the £1.7 billion level they were at in late October, while net cash is expected to have jumped £54 million to £900 million in the same period.

It added: “Berkeley continues to focus on the investment programme in place to bring its portfolio of long-term brownfield sites into production, underpinning future delivery and earnings, and sustaining some 28,000 UK jobs directly and indirectly throughout its supply chain.”

Shares had risen 2.3% in the early afternoon on Friday.

The builder said it had refinanced its bank facilities since October. The old facilities were for £750 million and were due to expire in November next year.

It now has an £800 million facility set to expire February 2027, with the ability to extend by up to two years.