Berkeley warns against stricter mortgage lending
Housebuilder Berkeley cautioned against 'excessive regulation' of mortgage lending as it unveiled improved profits and sales.
Tony Pidgley: Strong results at a time when the economy is looking to find traction
It said any clampdown on banks' ability to lend at sensible loan to value levels should be introduced 'sensitively' - or it risked putting a severe brake on a housing market recovery.
'Irresponsible lending must be prevented but there should be sufficient flexibility to allow hard-working people who are able to meet their mortgage commitments, and who are in the very substantial majority, to acquire their own home, while providing a support mechanism for those who do fall into difficulty,' it said.
But the company painted a positive picture of the housing market today as it lifted profit hopes for the full year.
The group, which focuses on London and the south east, reported a 20% rise in reservations, driven by a surge in the number of sites on offer, stable prices and strong demand in the capital.
The Surrey-based firm said it believed house prices and transactions should remain stable in the coming year.
Berkeley's shares jumped 36p to 876p after it reported a 16% rise in revenues to £336.2m in the six months to October 31. Pre-tax profits increased 18.5% to £61.1m.
Chairman Tony Pidgley said: 'This strong set of results represents an excellent performance from Berkeley at a time when the economy is looking to find traction for what is proving an elusive sustained recovery.'
The upbeat performance follows figures from Nationwide on Wednesday which revealed a recent run of house price falls had wiped out most of the gains seen to property values during the past year.
Berkeley Group Holdings put its increase in sales reservations down to new planning consents on more than 30 sites last year, which has increased the number of sites the firm is selling by 30%.
The company said high demand in London was partly driven by an increase in overseas customers looking for a home or investment in the city. The increase in sales reservations has led to a 22% rise in forward order sales to £790.1m, the company added.
Berkeley acquired new land in the period, covering 13 new sites and 2,500 plots, including prime London locations in Westminster and on Hammersmith embankment. Looking ahead, the company said its outlook was tied to the success of London in attracting investment, employment and retaining its status as a "world city".
Chris Millington, analyst at broker Numis Securities, said the results were strong and ahead of expectations.
'The main driver of the performance is an increase in sales outlets which has been supported by stable sales trends in London and the south east,' he commented.
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