Redrow sees demand soften as housing market reverts to normal levels
HOUSEBUILDER Redrow has said the high demand for new homes generated by the Government’s Help to Buy scheme has reverted to a more normal level of activity.
The company, founded in November 1974 by Wolverhampton Wanderers owner Steve Morgan, said this, combined with a lack of availability on many of its sites due to the strong sales position, produced a sales rate per outlet per week for its regional businesses of 0.65, compared to the abnormally high rate of 0.87 in the summer of 2013.
Morgan said in an AGM statement: “During the last 10 weeks we have experienced a traditional autumn market and the sales rate, excluding London, was 0.68, in line with last year.
“In London our developments on release are almost fully sold out and therefore, due to the timing of the launch of our new developments, year-to-date private reservations are 22 compared to 86 last year.
“Cancellation rates remain at historically low levels. The average selling price of private reservations in the year to date is 4% ahead of the same period last year at £284,000, due to both geographical mix and limited house price inflation.”
He said the firm’s private order book remained strong and in total was up 10% year on year at £465m, with the regional order book up 25%.
“Since the start of the financial year we have added 1,500 plots across 14 sites to our current land bank, 520 of which were converted from Forward Land. The total current land bank, i.e. land with a planning permission, both owned and contracted, has therefore increased to 16,914 plots,” he added.
“Whilst the planning system at a strategic level has improved over recent years, obtaining detailed consents and clearing countless unnecessary conditions remains a significant constraint on new outlet openings and growth.”
Morgan also said that “political posturing” ahead of next year’s General Election was already having a detrimental impact on the time taken to grant planning permissions in many parts of the country.
“Due to the phasing of land purchases and legal completions, our net debt has reduced from £173m in June to c£120m currently. We expect net debt to be c£150m at the end of December 2014. Our balance sheet remains strong, leaving us well placed to continue to invest in new sites,” he said.
