EU Referendum: Berkeley's home reservations fall by a quarter amid Brexit vote uncertainty

The uncertainty surrounding the European Union referendum and weakening demand for luxury homes in London has seen reservations on new homes fall by 20% in the first five months of the year, housebuilder Berkeley Group warned on Wednesday (15 June).

The FTSE 100-listed company, which is primarily focused on London and south-east England, said both the new and second hand homes market have not seen transactions rise to "the levels we all would hope for at this stage in the cycle".

Demand for luxury property has suffered a gradual decline since the introduction of a new stamp duty in December 2014, while a widespread weakness in emerging market currencies has also contributed to a lack of demand from foreign investors.

The warning came as Berkeley revealed that in the 12 months to the end of April, revenue fell from £2.12bn (€2.68bn, $3bn) to £2.05bn, while pre-tax profit slid from £539.7m to £530.9m, which Berkeley blamed on "reduced ground rent sales".

"Global macro uncertainty and the impending EU referendum have had a dampening effect on investment levels across all businesses and this is likely to continue up to and immediately after the result of the referendum," the company said in a statement.

"This, along with the market adjusting to higher levels of property transaction taxes, has affected the upper end of the housing market in London, although underlying interest and demand remain good."

Meanwhile, group chairman Tony Pidgley offered his support to the pro-European campaign, indicating the outcome of next week's referendum could have a crucial impact on the housebuilding sector.

"The outcome of next week's referendum on Britain's membership of the European Union is significant for the UK's housebuilding and property sector," he said.

"Berkeley supports a vote to remain in the EU. London's status as the world's best big city is underpinned by labour mobility, cultural diversity and a constant influx of talent and investment from around the world, and the UK economy in turn is powered by the success of our capital city."