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Berkeley’s bullish outlook ‘huge statement of confidence’ in housing market ‒ AJ Bell

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  • 23/01/2020
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Berkeley’s bullish outlook ‘huge statement of confidence’ in housing market ‒ AJ Bell
The decision by housebuilder Berkeley Group to hand over £1bn to shareholders over the next two years is a sign of the positive prospects for the section of housing market is serves, according to AJ Bell.

 

Analysis from Russ Mould, investment director at AJ Bell, said the payouts were “a huge statement of confidence” in not only the company’s prospects, but also those for high-end properties in London and the south east more generally.

In its results published yesterday, Berkeley said it was planning to increase housing production and delivery by around 50 per cent over the next six years, with work already ongoing at 25 regeneration sites.

Mould noted that this implies the completion of around 5,500 dwellings, and suggested that the “bullish outlook” from chairman Tony Pidgley ‒ who has a long record in correctly calling the housing cycle dating back to the mid-1980s ‒ would provide a boost to both the market and politicians hoping to see increased numbers of new homes.

He added: “Given Mr. Pidgley’s proven nose for the market, it is interesting to see how Berkeley is moving beyond its traditional, core London market and out into the Home Counties. Eight of the eleven new developments launched in the year to April 2019 were based outside of the nation’s capital.”

Mould also highlighted that the positive results were not down to the Help to Buy scheme ‒ a common accusation levelled against developers ‒ with just six per cent of the firm’s completions involving buyers using the scheme.

This is substantially lower than the average of 37 per cent across FTSE 100 and FTSE 250 house builders.

 

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