LONDON (Alliance News) - Northacre PLC on Thursday said the UK prime residential sector is expected to remain flat in the coming months, with the Brexit vote expected to add extra caution to an area already facing headwinds.
Northacre designs, develops and markets prime residential sites in London.
The company pointed to the increase in stamp duty in April as the chief factor hitting prime residential activity and said it was "difficult to see how the new government can continue to ignore the decline in taxation income as a result of falling sales".
"There has been no positive impact at the lower end of the market, and we believe the current stamp duty levy will have to be reviewed before long," Chairman Klas Nilsson said.
Alongside this, Northacre said there remains "political and economic" uncertainty in regards to the UK's relationship with the European Union in light of the Brexit vote, though noted it was still "too early to make any predictions about the precise impact" of the vote.
However, the company said the outlook for the prime residential sector was that it will remain flat at least for the next few months. Investors will be able to buy financial assets cheaply thanks tot the weakening sterling, though this is "less likely to be so beneficial" to the prime residential sector, Northacre added.
Despite this, the company pointed to two "significant projects" in which it is in the process of construction in the "more benign construction climate". These sites have the potential to be delivered to the market at a time of "more economic certainty", Northacre said.
Northacre posted revenue of GBP1.8 million for the six months ended June 30, down from GBP2.0 million a year earlier, causing its pretax loss to widen to GBP467,000 from GBP351,000.
However, Northacre noted that construction inflation had slowed "considerably" with this expected to be minimal for the foreseeable future.
Shares in Northacre were untraded on Thursday, having last traded at 32.00 pence.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
Copyright 2016 Alliance News Limited. All Rights Reserved.
