Publications
Partners
London - British housebuilder Berkeley has attacked government measures designed to help cool the country's surging housing market, saying they were a poor policy response that would prevent house purchases by people who could afford them.
British house prices have risen by 11% over the last year, data showed earlier this month, benefiting house builders but leading to concerns that the property market could overheat and pose a risk to financial stability.
Finance minister George Osborne said last week he would give the Bank of England stronger powers to curb mortgage lending, by stopping Britons taking out loans that are too big compared with their income or the value of their home.
The comments sent shares in leading British housebuilders down more than 4% on the day.
"If you bring (in) these new rules, you stop people buying, you're stopping people who can afford to buy, so personally I think the changes that the Bank of England proposed on mortgages are poor," Berkeley Managing Director Rob Perrins told Reuters on Wednesday.
"It's a really bad thing. I think you should allow the mortgage market to work, the key thing is employment. People when they do buy a home and they are in employment, they will save to pay their interest payments," Perrins added.
The housebuilder, which said it had created 3 000 new jobs in the year ended April 30, has seen its profits jump in recent years thanks to strong demand for its London homes from overseas buyers.
It has been further helped by improved buyer sentiment stoked by government schemes to help Britons buy their first home.
Perrins's comments came after Berkeley posted a 40% rise in full-year pretax profit and said it was on track to deliver further growth in the long term.
Good demand
Pretax profit rose to £380m from £270.7m a year earlier, above the top end of the range of analyst forecasts between £309m and £379m, according to a Thomson Reuters survey of 13 banks and brokerages.
"We have had very good demand ... People now feel like the economy is beginning to pick up and they are getting real wage growth, so they feel much more confidence to come and buy," said Perrins.
Berkeley said it invested £353m in nine new sites for the year ended April 30, which was sufficient to build 2 500 homes.
It also said it had a "pipeline" of 11 000 plots of land, which would be worth £1.5bn over the next five years.
Shares in Berkeley fell 3.7% to 2 178 pence by 12:19, making it one of the biggest losers in the FTSE 250 index of mid-sized companies. The stock fell as low as 2 166p, equaling a seven-month low set last month.
"Berkeley's numbers are bang in line with expectations, perhaps a tad ahead," said analyst Stephen Rawlinson at brokerage Whitman Howard.
"Telling everyone that the housebuilders are in a good moment is not that helpful really, as share prices are being driven by sentiment and a view about whether the good performance will continue," Rawlinson added.
