London-focused house builder Berkeley Group has reaffirmed its £450m pre-tax profit target for the current financial year despite warning that geopolitical tensions, stubborn inflation risks and regulatory delays continue to weigh on the housing market.

In a trading update covering the period from November to the end of February, the house builder said it still expects to deliver around £450m pre-tax profit this year and a similar level in 2027.

The group is also targeting a year-end net cash position of around £300m after settling more than £250m of land creditors, returning £191m to shareholders so far this year and continuing to invest in its Berkeley Living build-to-rent platform.

But Berkeley warned the market remains fragile.

The developer said consumer confidence continues to be constrained by macroeconomic uncertainty and geopolitical events, with the emerging situation in the Middle East weighing on market sentiment.

The group added that the risk of higher inflation and interest rates staying elevated for longer could further pressure housing demand.

Despite this, Berkeley said buyer activity has started to recover following a slowdown around the autumn Budget.

Sales enquiries remain good and the value of underlying reservations has been recovering towards levels seen last summer before the pre-Budget hiatus.

For buyers with liquidity, Berkeley said the current market dislocation may present attractive buying opportunities.

The company is also reviewing existing planning consents across its pipeline to restore margins before moving schemes into production.

Berkeley welcomed the Government and Greater London Authority’s proposed “Homes for London” package aimed at improving scheme viability across the capital.

However, it again warned that the Building Safety Regulator continues to slow the delivery of new homes.

The poor initial implementation of the BSR has severely impacted the supply of new homes in London and other urban areas.

While progress has been made in recent months, Berkeley said approvals within the prescribed timeframe are still the exception rather than the norm.