Homebuilder Berkeley Group has warned it expects house sales to “remain subdued” as its reservations have dropped by a third.
The London-listed firm’s profits have lifted for the past half-year but it has completed fewer homes as it faces a “challenging” market backdrop.
It comes after a raft of rival housebuilders have also cautioned over weakness in the market in the face of soaring interest rates and tighter household finances.
The group said: “During the last six months, macro volatility has increased, domestically and abroad, with the prospect of UK interest rates remaining higher for longer and weak economic growth projections.
“We expect the sales market will remain subdued before inflecting in its normal cyclical manner once there is greater confidence in a downward trajectory for interest rates and economic stability returns.”
Berkeley also said it completed fewer homes over the latest period, delivering 1,785 homes, as well as 204 through joint ventures, over the six months to October 31.
This dropped from 2,080, and 251 from joint ventures, over the same period last year.
Nevertheless, Berkeley also revealed that pre-tax profits grew by 4.6 percent to £298million for the six-month period, compared with a year earlier.
In the firm’s update to shareholders, bosses were also critical of UK planning and regulation rules.
Rob Perrins, chief executive, said: “Despite urban regeneration being a clear national priority, it has become increasingly difficult to progress this form of development as changes to planning, tax and regulatory regimes have created an increasingly uncertain, unpredictable and burdensome environment.
“This is driving investment away from urban areas, restricting growth and preventing homes and other tangible benefits being delivered.”
James Needham, director of property investment company Alesco, told articulate.co.uk previously the housing market will likely face “continued stagnation” in expensive markets, such as London and the broader southern regions.
He said: “We expect the South West, South East, and London to bear the brunt, given their already high property prices.
“Areas with elevated property values are likely to feel the impact as mortgage rates reduce affordability. While we don’t expect a massive price drop, we foresee a slowdown in the market with fewer transactions.
“Buyers and sellers are adjusting their expectations accordingly. The asking price and sold price are likely to get closer as sellers need to make moves in this changing landscape.”
For the latest personal finance news, follow us on Twitter at @ExpressMoney_.
