Photographer: Simon Dawson/Bloomberg

Berkeley Home Reservations Fell by 20% Ahead of Brexit Vote

Berkeley Group Holdings Plc said reservations for new homes dropped 20 percent in the five months through May after the developer offered fewer projects for sale ahead of the U.K.’s vote on membership of the European Union next week. The shares fell.

“After such strong market conditions for our industry, transaction levels in both the second-hand and new-homes markets have not increased to the levels we all would hope for at this stage in the cycle,” Chief Executive Officer Rob Perrins said in a statement on Wednesday.

Berkeley’s shares fell as much as 2.7 percent to the lowest since May 13 and were trading at 2,940 pence at 11:49 a.m. in London trading.

Pre-tax profit for the full year was down 1.6 percent to 530.9 million ($752 million) as average selling prices dropped from 575,000 pounds to 515,000 pounds reflecting more sales at the low end of the company’s price range. Demand for the most expensive homes was hit by higher sales taxes, which rose 3 percentage points for landlords and second-home purchasers in April, Berkeley said.

In relation to the Brexit vote, Berkeley has “most to lose from uncertainty in the wake of a possible leave decision, as the stock market has already figured out quite clearly. On the flip side it should be the biggest beneficiary of a remain decision,” Charlie Campbell, an analyst at Liberum, wrote in a note to clients.

Net income at Berkeley declined to 404 million pounds, or 268.7 pence a share, from 423.5 million pounds, or 276.9 pence, a year earlier as revenue slipped.

“We continue to achieve sales prices ahead of our business plan with price inflation remaining for properties less than 1.25 million pounds where demand is more robust, with Berkeley already absorbing the increased cost of transaction taxes above this level in its pricing,” the company said in the statement.

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