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Redrow PLC on Friday said its full-year results are likely to be towards the lower end of its previously guided range, as the UK housing market ‘remained subdued’ through the autumn selling season.
The St Davids Park, Wales-based housebuilder said the value of net private reservations in the first 18 weeks of financial 2024, which began on July 1, was £384 million, down 25% from £515 million a year before.
Redrow shares were down 5.6% at 490.80 pence early Friday in London, while the wider FTSE 250 index was down 2.3%.
‘Following the usual summer slowdown we reported in our 2023 results announcement, the housing market has remained subdued through the autumn,’ Chair Richard Akers will tell Redrow’s annual general meeting on Friday. ‘The business has had to adapt to this more difficult trading environment in terms of build rate and operating costs.’
Redrow explained that while 35% of its private customers are cash buyers of homes, they sit atop house purchase chains that are breaking down more frequently due to difficulties with mortgage loans lower down the chain. This has caused the housebuilder’s cancellation rate to rise to 25% from 22% a year before.
As a result, net weekly reservation rate per outlet was 0.36 in the recent 18 weeks, up from 0.34 in the first 10 weeks but down from 0.38 in the first half of financial 2023. As well, the average selling price slipped by 2.5% to £471,000 from £483,000. Homes turnover for the recent 18 weeks was £456 million, down from £650 million a year ago.
Redrow operated from 125 outlets in the recent period, up from 120 a year ago, but due to the slower sales, it expects the average number of outlets for the full year to be about 113, down from the 117 it had previously guided. The total order book as of November 3 was worth £864 million, of which 66% is exchanged, down from £1.36 billion with 74% exchanged at the same time last year.
More positively, Redrow said build cost inflation is abating. It is expected to run at about 7% in the current financial year.
Redrow will release results for the half-year ending December 31 on February 8.
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