𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

London-focused housebuilder Berkeley has cautioned that conflict in the Middle East could weigh on the housing market, potentially pushing up inflation and keeping interest rates elevated.

The company, which specialises in building homes in the capital, as well as Birmingham and the south of England, said trading over recent months has remained “constrained by the impact on consumer confidence of geopolitical events and macro-economic uncertainty”.

The emerging situation in the Middle East was “weighing heavily on risk sentiment”, Berkeley said, and that it was mindful of the potential for higher inflation this year, and for interest rates to stay higher for longer.

The remarks come after the Office for Budget Responsibility (OBR), the Government’s official forecaster, warned that one percentage point could be added to UK inflation this year, if energy prices remain at current elevated levels.

Average mortgage rates have risen past the 5% mark as lenders have scrambled to hike their rates, according to figures from Moneyfactscompare.co.uk.

Some of Britain’s biggest lenders including HSBC UK, Barclays, Santander, Halifax and Lloyds have increased mortgage rates this week and further hikes could be around the corner.

Despite the developments, Berkeley said sales inquiries for new homes were good and the value of reservations has been recovering towards the levels seen over the summer, prior to a pre-autumn budget lull in demand.

The company said it was still expecting to make a pre-tax profit of £450 million for the latest financial year, and similar in the year ahead, so was making no changes to previous guidance.

It also heralded a “positive” outlook for the London market in the long term, saying the city has “resilience” and that the current volatility was a good opportunity for customers with liquidity to buy.