Two of the UK’s largest house builders have experienced differing fortunes in the run up and aftermath of the EU referendum.
In full year results posted this morning, Wales’ biggest house builder Redrow reported a huge rise of 23% to £250m in its pretax profits, up from £204m, while revenue increased 20% to £1.38bn, up from £1.15bn. The builder completed 4,716 homes in the year, up from 4,022 in the same period last year, selling at an average price of 7% higher.
Redrow, run by Steve Morgan, said sales in the 10 weeks since the EU referendum were actually 8% up on a strong period last year. The firm said: “We have seen very little impact as a result of the Brexit vote.”
Meanwhile, in a trading update, Berkeley said customer reservations for its new homes were 20% down on 2015 so far owing to tax changes and the EU referendum.
The London-focused 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 London firm has bought just two development sites since the vote and said it will continue with a more selective approach to land buying.
Nevertheless it reiterated its profit guidance, saying it still expected to make £2bn of pretax profit by the end of April 2018 thanks to a strong pre-order book.
The Tony Pidgley-run firm also attacked government housing policy in London, warning it could damage the wider UK economy.
In a statement, the firm said: “What is increasingly clear is that government policy, which has been helpful outside London, has had a negative effect on the capital.
“Transaction taxes are now too high and this is restricting both mobility in the second-hand market and the pace of supply and delivery of new homes in London and the south east.
“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.”
