Homebuilder Berkeley warns of construction cost inflation, supply chain issues

UK high-end homebuilder Berkeley Group Holdings Plc (BKGH.L) said on Friday it was seeing construction cost inflation and was mindful of ongoing supply chain and labour market issues due to Brexit and the pandemic.

The warning comes close on the heels of top builder Barratt Developments (BDEV.L) on Thursday flagging a 4-5% rise in construction costs in what was the first major indication of inflationary pressures in an otherwise vibrant housing market.

Cobham-headquartered Berkeley said “operating environment remains challenging” but the company declined to give additional details when Reuters requested for information on the specifics of the supply chain disruptions.

The British government last week rejected calls from retail and logistics firms to temporarily ease post-Brexit immigration rules which they say are contributing to a shortage of truck drivers and acute supply chain disruption, but statements from Barratt and Berkeley point to a wider impact.

Berkeley, which operates mainly in London, Birmingham and the South of England, said it expects pre-tax profit for the year ending April 30, 2022 to be at par or ahead of the corresponding year-ago period.

The UK market has been underpinned by a temporary tax break for homebuyers set in place during the COVID-19 crisis, and prices unexpectedly bounced back strongly in August after a fall the month before when the break began to be phased out.