Redrow bullish but Berkeley downbeat after Brexit vote

Redrow and Berkeley have painted very different pictures of the state of the housing market post-Brexit vote, with Redrow bullish and London-focussed Berkeley downbeat.

In bumper full-year results posted this morning, Redrow, run by Steve Morgan (pictured, left) said sales in the 10 weeks since the EU referendum were actually 8% up on a strong period last year. The firm added: “We have seen very little impact as a result of the Brexit vote.”

In its results for the year to this June, Redrow posted a 23% jump in pre-tax profit to £250m, up from £204m, while revenue increased 20% to £1.38bn, up from £1.15bn. Legal completions rose 17% to 4,716, up from 4,022.

Meanwhile, in a trading update, Berkeley said customer reservations for its new homes were 20% down on 2015.

The London-focussed builder had previously told investors reservations were 20% down over the first five months of 2016 in the run up to the EU referendum, and, following a “hiatus” either side of the vote, reservations continued at this subdued level in August.

The firm – founded by Tony Pidgley (pictured, right) – bought just two development sites since the vote and said it will continue with a more selective approach to land buying.

Berkeley said despite more challenging market conditions, it was still on course to deliver £2bn of pre-tax profit over the three-year period to 2018, having generated £500m in its first year.

It also said it would continue delivering returns to shareholders, and would pay a £1 interim dividend as planned this month, with a further £10 per share staggered over the next five years.

But it took aim at the government’s housing policies, saying that whilst they have “been helpful outside London, [they have] had a negative effect on the capital”.

The housebuilder said transaction taxes were too high, hitting the supply of homes in the South-east, as were Community Infrastructure Levy charges adopted by local authorities.

Berkeley also criticised the “tension” between the Conservatives’ starter homes policy nationally and London mayor Sadiq Khan’s ambition to build more affordable housing.

The firm added: “While these challenges persist, and the barriers to entry for small builders remain high, London will fall well short of its targets for new homes.”