Housebuilder Redrow cheered as prices rise
HOUSEBUILDER Redrow has reported a strong set of figures on the back of a 10% rise in the average selling price of its houses.
In the six months to the end of December revenue was up 10.3% to £257m while pre-tax profits jumped 50% to £23m.
The group, headed by Wolverhampton Wanderers chairmain Steve Morgan, sold 1,202 homes during the period, up 2.9%, at an average selling price of £224,000, up 9.8%.
Mr Morgan credited government schemes such as NewBuy, which has helped to re-introduce 95% mortgages, and Funding for Lending, which seeks to reduce the cost of borrowing, with driving sales.
He said: “Redrow has delivered a strong set of results with another significant improvement in profitability. The backdrop remains challenging, but the stability of the housing market, the gradual improvement in both the planning environment and the mortgage market, together with our distinct focus on our high-quality, differentiated family housing range has meant that we have continued to make good progress.
“We applaud the Government’s attempts to improve the market through the NewBuy, extension of FirstBuy, and Funding for Lending schemes and if the current trend in reduction of mortgage rates continues, it will undoubtedly assist in the housing market’s gradual return to more normalised conditions. The National Planning Policy Framework has also stimulated some positive changes in the planning environment, albeit this has still got a long way to go.”
However, net debt rose to £65.2m, giving a gearing of 11%. This is compared to £14m and 2% gearing in June 2012. The extra cash is being used to increase the land bank – up by 939 plots to 13,295 since June – and fund large apartment schemes in London.
Mr Morgan added: “We have started the second half well, with reservations up 8% on the same period last year. Additionally we are on track to increase the number of outlets from 82 to around 90 by June. Given the strong pipeline of new sites and the modest improvement in market conditions, I am cautiously optimistic that Redrow’s strong recovery is set to continue. In line with this, we expect to propose a modest final dividend at the year end.”
