Berkeley Group's High-Value Homes at Risk from Reported £500,000 Scheme Cap, Goldman Sachs Warns

A reported £500,000 price cap on the UK's upcoming 'Your First Home' equity loan scheme is expected to disproportionately affect high-end property developer Berkeley Group, according to a new analysis from Goldman Sachs. The threshold, reported by The Times, is lower than the £600,000 limit of the previous 'Help to Buy' program, creating potential challenges for builders focused on premium markets.

Impact on Berkeley's Portfolio

Analysts at Goldman Sachs noted that the proposed cap would act as a headwind for Berkeley, given its portfolio average selling price of £546,000. The firm's concentration in higher-value regions like London and the South East makes it particularly vulnerable to the new limit.

A review of Berkeley's current listings highlights the potential impact:

• Only 43 available units in Greater London are priced below the £500,000 criteria.
• Across the UK, just 148 of Berkeley’s 459 listed homes, or approximately 32%, would qualify under the proposed cap.
• Goldman Sachs calculated that raising the threshold to £750,000 would be necessary to include a more significant portion of its London stock, capturing 135 units.

Contrasting Outlook for Volume Builders

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In contrast, the Goldman Sachs analysts believe that national volume homebuilders will be largely unaffected by the change. Firms such as Persimmon, Taylor Wimpey, Barratt, Redrow, and Bellway are expected to be "substantially insulated" from the cap.

This is because their portfolio average selling prices are comfortably below the £500,000 threshold, meaning a larger percentage of their housing stock will remain eligible for buyers using the government-backed scheme.

Awaiting Official Details

While the reported cap provides an early indication of the new policy's direction, Goldman Sachs emphasized that definitive details have not yet been released. Finalised localised price caps and other granular information are expected to be formally unveiled in the UK's upcoming Autumn Budget.