House building giant Berkeley said intense competition among subcontractors is keeping construction costs down with the “highly-competitive” environment expected to continue next year.

In its half-years results update today the company said: “Berkeley has experienced highly competitive tendering across most trades during the period, as our supply chain looks to secure near-term work in an environment where housing and wider construction activity remain subdued, particularly in London.

“These conditions have offset the inflationary impact of increases to the National Living Wage and employers’ National Insurance contributions, and with material prices stable, build costs remained flat during the half year.

“We expect these competitive market conditions to continue into 2026, with build costs likely to remain broadly unchanged.”

Berkeley also warned about skills shortages intensifying across London due to Government policies.

It said: “However, we remain mindful of ongoing regulatory changes, including the Building Safety regime and Gateway 2 requirements, and recognise that prolonged weakness in construction activity increases the risk of skills and experience leaving the industry.

“A lack of new project starts and delays to live projects is placing financial strain on the supply chain, and Berkeley continues to work closely with its trusted partners to maintain delivery capability.”

Berkeley said it will prioritise shareholder returns in the current environment.

Rob Perrins, Executive Chair, said: “Berkeley has great optionality in its 10-year strategy for the allocation of capital between its three value drivers: investing into the core business; investing into Berkeley Living, its BTR platform; or delivering returns to shareholders through share buy-backs or dividends.

“In today’s operating environment, we will carefully match delivery to the underlying market demand and the pace of the BSR’s gateway approval process, prioritising cash flow over the income statement, and deliver Berkeley Living’s initial BTR assets, stabilising income ready for the introduction of third-party capital.

“Based on our current financial position and operational focus, coupled with the dislocation in the share price, we will prioritise shareholder returns in this environment.”