Shares in London housebuilder Berkeley Group shot up in early trading after it broke away from the pack, saying the London property market is "stabilising".
The figures
In a trading update today, the London-focused housebuilder said profits were on target to hit £3bn in by April 20121, with forward sales expected to top £2.6bn.
But although it said the market in the South East had stabilised, it added that underlying reservations in the seven months since Brexit had fallen 16 per cent, while those pesky affordable housing obligations had led to the number of new homes it had started in the capital falling by 30 per cent.
It is currently working on 58 sites, with 22 on the way.
Meanwhile, it added that it's on course to pay out the 85.24p dividend it announced at the end of February. Not surprisingly, shares shot up 6.1 per cent to 3,144p.
Why it's interesting
In recent months the London market has been cited as the driving factor behind falling profits at everyone from estate agents (Foxtons, Countrywide) to rival housebuilders.
So the assertion things are beginning to look brighter by Berkeley Group, which focuses almost exclusively on building high-end homes in the capital, is breath of fresh air.
But Berkeley isn't free of its problems: it complained onerous demands by planners that housebuilders make provisions for schools and other public realm improvements had led to new starts in the capital falling.
"Berkeley is concerned by this under-supply and the knock-on effect it has on the provision of housing of tenures which, if not address, represents a threat to London remaining the inclusive and open global city which is so important to London and the UK's growth and prosperity," it said.
Meanwhile, it said despite predictions of house price apocalypse after Brexit, it expected the rest of the year to go well.
"Enquiry levels remain robust, cancellation rates are at normal levels and pricing continues to be resilient and above business plan levels."
What Berkeley said
Berkeley is in a strong position and remains on target to meet its ambition to deliver at least £3bn of pre-tax profit over the five years ending 30 April 2021. Forward sales are expected to be in excess of £2.6bn at 30 April 2017 at the prevailing sales rate and Berkeley remains ungeared. We continue to make selective acquisitions to our well bought land bank from which we can add value, delivering homes of all tenures in balanced and vibrant new communities that include shops, schools, new open spaces and other community facilities.
What analysts said
Anthony Codling, of Jefferies, said:
While reservations are down 16 per cent since August and new starts across the London new build market falling by 30 per cent, Berkeley is on track to deliver a strong set of results... It is a brave person who bets against [Berkeley Group chairman Tony] Pidgley.
Today's statement is a clear signal of the disconnect between the new build and second hand market. While London based estate agents are feeling the cold, Berkeley Group is warming itself in the Spring sunshine.