Berkeley Freezes Investment in UK Housing Market as Rates Weigh

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Berkeley Group Holdings Plc said it has halted investment in new projects as high interest rates grip the UK housing market.

The developer said it chose not to acquire any land from May through August, citing ongoing issues in the planning system, persistent inflation and high interest rates, according to a statement Friday. Berkeley reported a 35% drop in the value of new home reservations in the period compared with the rate the previous year.UK households are facing greater costs triggered by higher borrowing costs and inflation that’s reached generational highs.

Britain’s four largest listed homebuilders have seen their market capitalizations tumble this year, with Persimmon Plc dropping out of the FTSE 100 last week on the back of a slump in first-time buyer sales. Barratt Developments Plc, Persimmon and Taylor Wimpey Plc, which collectively built more than 45,000 homes last year, are expected to complete fewer properties in 2023 as high rates crush demand.

However, Berkeley — which builds far fewer homes per year than its main three rivals and focuses on more affluent customers in London and the southeast of England — said pricing remains resilient and above its business plan levels due to the constrained supply of homes in the market, while cancellation rates are stable.

 

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