Redrow has became the latest major UK homebuilder to lay bare how the mortgage crisis is hurting trade, with the company warning sales and profits are expected to tumble this year.
The FTSE 250 firm, which mainly focuses on family homes, said the summer sales market was “challenging”. In the first 10 weeks of the new financial year it saw sales per outlet per week drop to 0.34 from 0.61 a year earlier.
That came on top of a tough year to July 2023 when Redrow, like rivals, saw demand take a hit as the cost of living crisis and high interest rates piled pressure on buyers.
During the period the company offered incentives in some cases, such as deposit contributions or stamp duty help, to help get deals over the line.
Two regional sales offices have closed out of 14 amid the difficult market conditions.
The company managed to keep revenue steady at £2.1 billion, although total completions slipped 5% to 5,436 and underlying pre-tax profit declined 4% to £395 million. Statutory pre-tax profit jumped 61% to £395 million- the prior year registered some one off exceptional costs.
Today Redrow guided sales in the year to July 2024 are expected to come in at £1.65 billion-to £1.7 billion, and pre-tax profits to be in the range of £180 million to £200 million.
Chief executive Matthew Pratt said: “Following several consecutive Bank of England base rate increases, we remain hopeful that, as inflation eases, we will see some stability in mortgage rates. The reduction in mortgage volatility will enable potential customers to progress the purchase of their home with financial certainty.”
He told the Evening Standard “there remains a chronic shortage of new homes across the country” and there is underlying demand for properties.
The update comes after Barratt last week revealed the value of its forward order book has dropped by over a third.
