UK housebuilder Berkeley flags inflation woes but sticks to profit outlook

A builder assembles scaffolding as he works on new homes in south London
A builder assembles scaffolding as he works on new homes, in south London June 3, 2014. REUTERS/Andrew Winning/Files

March 11 (Reuters) - UK housebuilder Berkeley highlighted persistent strong demand in an under-supplied housing market on Friday, while flagging worries around accelerating inflation, supply chain disruptions and cladding issues.

The Cobham-headquartered company said it remained on track to meet earnings outlook for the year ending April 30, and forecast forward sales to be above 1.70 billion pounds ($2.22 billion) at the end of the 2022 fiscal.

The UK housing market has stayed resilient even after the expiry of a tax holiday in September, continuing its momentum into 2022 with top players including Barratt (BDEV.L) and Persimmon (PSN.L) forecasting strong market activity this year.

"Berkeley has continued to trade robustly since its half year, with the value of underlying sales reservations remaining slightly ahead of pre-pandemic levels," the FTSE 100 company said in a statement.

Rising inflation and supply chain issues caused by the pandemic have troubled corporate UK, but most of the major homebuilders have said they were able to tackle these pressures due to red-hot house prices.

UK's inflation rose at the fastest annual pace in nearly 30 years in January and financial markets expect Bank of England interest rates to rise to 2% by the end of 2022. read more

In January, Britain ordered housebuilders to pay around $5.4 billion to help remove dangerous cladding from buildings following a deadly 2017 London fire that left government, developers and owners at loggerheads over how to make properties safe. read more

($1 = 0.7642 pounds)

Reporting by Shanima A in Bengaluru; Editing by Subhranshu Sahu

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