Legendary housebuilder Tony Pidgley is primarily known for three things.
Firstly, he was a Barnardos baby, subsequently adopted by a family of gypsies.
Secondly, from such humble beginnings he rose to become one of the UKs highest-paid business chiefs.
And thirdly, he is credited with calling the house price crash at the end of the 1980s.
It is the latter of this hat-trick of nuggets that sprung to mind yesterday when Pidgley warned of an impending 30 per cent drop in profits for his company Berkeley, and sounded portentously bearish on the future of the London housing market.
“[With] London starts approximately 30 per cent lower than two years ago… it is telling that some funders and builders are choosing to exit the market,” he said. Pidgleys CEO Rob Perrins was even more downbeat.
Read more: Berkeley shares fall on cautious outlook
Berkeleys focus on relatively high-end properties in London makes the firm especially prone to any dip in the capital, and also means it benefits less from government schemes such as Help To Buy and the stamp duty exemption for first-time buyers – both of which have ceilings below the typical price level of a Berkeley home.
Little surprise, then, that Pidgley and several of his senior colleagues sold chunks of their shareholdings in the business last year.
But it is not only Berkeley and Pidgley warning of a gloomy outlook within the M25. Just last week fellow top 10 housebuilder Crest Nicholson said it was closing its central London office, adding that it would focus more on regional areas and buy less land in the city.
Read more: London house prices continue to fall as capital sees UK's sharpest drop
Berkeley, too, is rowing back on its land bank expansion, with analysts at AJ Bell calculating that its number of available plots has risen at the slowest rate since 2013.
All of which paints a rather ominous picture for the London market. Investors in the sector are still riding high – despite yesterdays near-six-per-cent drop, Berkeley shares remain 70 per cent higher than they were in the aftermath of the Brexit vote two summers ago. However, like many homeowners, shareholders will be wondering if now is the time to get out.
Those inclined to wait may want to keep a close eye on Barratt, Persimmon, and Taylor Wimpey, all of which present new numbers to the market in the coming weeks.
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