Berkeley warns of risk of ‘further deterioration’ in economic conditions due to Iran crisis

Berkeley has re-affirmed its profit guidance for the year while warning of the risk of “a further deterioration in macro conditions” due to the ongoing crisis in the Middle East.

In a third quarter trading update covering the period from 1 November 2025 to 28 February 2026, the housebuilder maintained its guidance of £450m in pre-tax profit for the year, with a similar level anticipated for full-year 2027.

The housebuilder said the trading environment over the period had been “constrained by the impact on consumer confidence of geo-political events and macro-economic uncertainty”, though it said the value of underlying reservations had been recovering to the levels seen last summer before pre-Budget uncertainty kicked in.

Addressing the ongoing conflict in the Middle East, Berkeley said the situation was “weighing heavily on risk sentiment” and said it would “await to see the impact of this on the market”.

“While reaffirming guidance, we are aware of the risk of a further deterioration in macro conditions with the potential for higher inflation in the near term and for interest rates to remain higher for longer.”

A research note from analyst Peel Hunt said that consensus pre-tax profit for Berkeley was between £461m and £480m for FY26/27, but said this “may edge lower on the update, and given the Middle Eastern conflict”.

In its trading update, the housebuilder also said the long-term outlook for the London market was “positive” despite current challenges.

It said the MHCLG and GLA’s ‘Homes for London’ package “contains all the right ingredients to address the viability challenge”, while it criticised “poor initial implementation” of the Building Safety Regulator, which it said had “severely impacted the supply of new homes in London and other urban areas”.

It stated support for the government’s aspiration that the BSR become an “enabling regulator” and said that while “good progress has been made over the last six months” there was “still a long way to go for this to become a reality, with approvals being achieved in the prescribed timeframe the norm, rather than the exception”.