Berkeley holds back investments amid tough housing climate

Half-year profit before tax slips 2% to 284.8 mln pounds

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Retains fiscal 2023 profit outlook of 600 mln pounds

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Reaffirms shareholder returns plan running till Sept 2025

Dec 9 (Reuters) - Berkeley Group said it would hold off land purchases in the near term to conserve cash as the high-end homebuilder grapples with a fall in bookings and rising cancellations as Britain's housing sector comes under pressure.

British homebuilders are facing falling house prices and weak demand as rising interest rates and an ill-fated mini-budget in September made mortgages less affordable.

Other major British homebuilders Barratt, Persimmon and Taylor Wimpey have flagged increasing slowdown concerns too.

"It has been good to see a little bit of stability return in the mortgage markets and if the rates can get below 5%, we are back to an environment when buying is certainly as good value as renting," Rob Perrins, Chief Executive Officer, told Reuters.

A key rate on mortgage borrowing costs in the UK had climbed to 6.07%, its highest level in almost 14 years, in early October days after former finance minister Kwasi Kwarteng's mini-budget comprising unfunded tax cuts jolted bond markets.

Berkeley, which focuses on brownfield projects which redevelop used land, maintained its 2023 profit outlook after reporting a 2% fall in half-year profit to 284.8 million pounds.

The company said since the end of September, the value of underlying sales had been around 25% lower than the previous five months, while cancellation rates rose to around 20% in the last couple of months, up from around roughly 13%.

The FTSE 100 company did not make any land acquisitions during the first-half period ended Oct. 31.

Berkeley, which operates across London, Birmingham and the the South of England, reaffirmed its commitment to returning 283 million pounds (£2.60 per share) to shareholders each year up to 2025.

It is targeting an annual profit of 600 million pounds this year and said it expects pre-tax earnings of at least 1.05 billion pounds ($1.29 billion) for 2024 and 2025 fiscal years, down from 1.25 billion pounds forecast earlier.

"We expect this level of medium-term earnings conviction will prove specific to Berkeley in the sector in the near term, given the unique visibility provided by the length and strength of its order book," said Barclays analysts in a note.

Berkeley said cash due on forward sales at half-year end rose to 2.33 billion pounds from 2.17 billion pounds a year earlier. ($1 = 0.8159 pounds) (Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Subhranshu Sahu and Elaine Hardcastle)