Redrow’s Morgan lambasts lenders as sales rise
HOUSEBUILDER Redrow has seen year-on-year homes sales rise 9% to £133m since July and the average price of reservations increase by 16%.
In an interim management statement issued ahead of today’s annual meeting chairman Steve Morgan said the retrun to traditional design values with its New Heritage Collection had been a great success for the company, based at Ewloe near Chester.
But he used the statement to rail against the state of the mortgage market which he said is stifling growth in the building industry and depriving people of the opportunity to buy their first homes. Underlying demand remains strong, said Mr Morgan, despite “scaremongering” in the media.
“Most people are left with little choice but to go into the private rented sector or live with their parents,” said Mr Morgan. “Every week we are forced to turn away potential purchasers simply because they do not have a deposit of 25% or more; people with excellent jobs who under normal circumstances would easily qualify for a mortgage.
“For generations 95% mortgages have been the norm. Indeed the vast majority of existing home owners started out buying their first home with a mortgage of this size. Yet the current generation of first time buyers are being denied the opportunity that their parents and grandparents took for granted, simply because they are unable to secure an affordable mortgage with a modest deposit.
“As a direct consequence of this worsening mortgage famine, the average age of an unassisted first time buyer is now 37 and rising rapidly.”
He added: “The demand for new homes remains strong, but with only six lenders now covering over 90% of the lending market, the mortgages to meet that demand are not available. In the last three years the number of mortgage products available to buyers with deposits of 5% or less has fallen from 1,224 to just 33. The situation could get a whole lot worse if the FSA’s proposed changes in its Mortgage Market Review come to fruition.”
Despite this frustration, said Mr Morgan, Redrow was in good health with net debt of £58m. It is now focusing on buying smaller development sites in prime locations and since July has acquired 800 plots at nine sites. The land bank stands at 13,000 plots, representing more than five years’ supply.
