Berkeley warns of Iran war weighing on housing market amid mortgage rates hikes

Dan Coatsworth, head of markets at AJ Bell, said: “There is good and bad news for housebuilder Berkeley.

“While it is sticking with its full-year guidance, the broader outlook looks gloomy thanks to geopolitical issues and the likely impact on consumer confidence, inflation and interest rates.

“After a difficult period after Covid, housebuilders were hoping for a gentle decline in rates leading to cheaper mortgages, increased demand, higher asking prices and build cost inflation to moderate.

“The foundations of that cosy narrative have been shaken by recent events in the Middle East and Berkeley, known as a quality operator in the housebuilding space, is hunkering down.

“Management looks set to prioritise cash generation, maintaining balance sheet strength and expanding on a build-to-rent strategy to reduce exposure to the ups and downs of the housing market and provide a reliable stream of recurring revenue.

“Whatever the short-term prospects, Berkeley remains as committed to the capital as a Tower of London Beefeater – thanks to the location’s role as a global hub for finance and technology.

“It wouldn’t be a set of results from a housebuilder without a little grumble on planning delays – a long-time bugbear for the industry – with Berkeley suggesting that improvements are not happening fast enough.”