Home sales stabilise at Redrow

HOME sales have been “remarkably stable” at housebuilder Redrow in recent months but mortgage availability remains a problem.

In an interim management statement issued ahead of today’s annual general meeting, the North West company said net reservations have averaged 45 homes a week during the first 18 weeks of its financial year.

Total net private reservations in the period were 47% ahead of last year with cancellation rates returning to historic norms.

Redrow, based at Ewloe near Chester, said mortgage availability, particularly in the higher loan-to-value category, remained a problem for the industry, although it said the situation had eased in recent weeks.

Selling prices have been slightly ahead of the company’s expectations, averaging £149,000. This figure is expected to rise as Redrow introduces more family housing with its New Heritage Collection.

Redrow launched a £150m rights offer in September with the aim of using the cash to strengthen its balance sheet, reduce gearing and allow it to take advantage of cheaper land values.

Today the company said there had been a 97% take-up of the 148.5 million new shares and would receive the proceeds “shortly”.

“With the underlying cash we expect to generate from our existing working capital and the proceeds from the rights issue, we are well placed to pursue opportunities in the land market. We anticipate that the land market will gradually return to more normal levels of activity over the next 12-18 months with increasing numbers of opportunities emerging,” said the company.

Half-year results are expected on February 25.