Berkeley Group Says Reservations Slumped 16% Since Brexit Vote

Berkeley Group Holdings Plc, London’s largest publicly traded homebuilder, said last year’s Brexit vote caused reservations to decline in the past seven months, though fiscal 2017 earnings will still be at the top end of analysts’ estimates. The shares gained.

Home reservations in August to February fell 16 percent compared with the year-earlier period, Berkeley said in a statement on Friday. While the market in London and the south east has now stabilized, the uncertainty surrounding Brexit resulted in a 30 percent drop in the construction of new homes in the U.K. capital during the period, the company said.

“The reduction in reservations is across all price points and reflects the ongoing impact of both Brexit uncertainty and the changes in recent years” to stamp-duty tax and mortgage-interest deductibility, Berkeley said.

London home prices have surged about 86 percent since 2009, meaning it now costs buyers 14.2 times their annual gross salary to purchase a property, the highest level on record and more than double the rate for the U.K. as a whole, according to Hometrack. Developers are sitting on a record number of unsold homes after sales of luxury properties under construction in the U.K. capital dropped to the lowest level since 2012, according to data compiled by Molior London.

Berkeley rose as much as 5.9 percent in London trading, the most since Dec. 2. The shares have gained about 11 percent this year.