Berkeley sees market stabilising

The group posted pre-tax profits of 110.3m in the year to April 30 – down by 8.4 per cent on a year earlier, although this was a smaller fall than most analysts had pencilled in.

Berkeley said that while there were "attractive opportunities" opening up in the land market, property transactions were 40 per cent down on historic levels.

The company, based in Cobham, Surrey, said its target market in London and the South East was being buoyed by demand from cash rich investors and overseas buyers who were taking advantage of the weak pound.

Customers snapping up properties for investment accounted for more than 50 per cent of underlying sales reservations, according to the group.

Sales prices were ahead of its targets set a year earlier and completions leapt 47 per cent higher to 2,201 in the year.

But a change in the type of properties sold saw average sale prices fall from 395,000 to 263,000 – largely accounting for a 12.4 per cent drop in group revenues to 615.3m.

The group said the industry was still digesting the implications of this week's Budget spending cuts and tax rises.

It added there were still "residual imbalances from the financial downturn, which will continue to affect the wider economy and the sector".

However, it is aiming to grow its land bank and earnings per share by 10 per cent over the next 12 months.

"The demanding nature of this challenge should not be under-estimated in these severely testing times," said the group.

The firm has weathered recession in far better shape than rivals. Unlike many debt-laden peers who had to be bailed out by lenders, the firm is free of borrowings and ended the financial year with net cash of nearly 317m.

The group, which is led by highly-respected chairman Tony Pidgley, shifted focus from volume housebuilding in 2004 to return cash to shareholders and also held back from expensive land purchases in 2006 and 2007 near the peak of the market.