Redrow sales continue slide

Redrow Heritage

Redrow’s sales since the start of July have declined further, falling to 0.34 reservations per outlet per week against the previous year’s 0.61, during an anticipated “challenging” summer.

Reporting on its results for the year ending July 2 2023, the housebuilder noted that the market remained tough following a “record” number of consecutive interest rate rises in close succession and with the “general rise in the cost of living”.

Its average private reservation rate per week for the reported financial year was 0.46 against the 0.68 of 2022. Lower sales rates since July follow further mortgage rate rises in response to interest rates.

Redrow said it had achieved a “strong underlying performance in an uncertain market”, with revenue totalling £2.13 billion, a marginal dip on 2022’s £2.14 billon. This had remained “stable” due to a rise in the average selling price of homes which had been factored into the housebuilder’s order book. The private average selling price rose 8%; the average selling price of Redrow’s Heritage homes increased 9% to £473,300.

This was against legal completions dropping 5% to 5,436 homes. Pre-tax profit was £395 million, up from 2022’s £246 million, but 4% below 2022’s underlying profit, chiefly due to cost inflation exceeding house price inflation during the year.

With the significantly reduced sales rate seen throughout the financial year, Redrow has issued guidance for revenue of £1.65 billion to £1.7 billion for its 2024 financial year and pre-tax profit of £180 million to £200 million.

It said that due to its land investments of two years ago, it was able to increase the number of average outlets during the financial year to 117 against last year’s 111. But this was three below original guidance, thanks to planning delays.

As reported in July, Redrow has closed two of its smaller divisional offices in response to market conditions – Southern and Thames Valley. These are now being managed by other local divisions. Redrow said it had also “reduced a number of roles” across its wider teams. “We have worked closely with affected colleagues to support them throughout this time,” it commented.

Redrow ended the financial year with a private order book of £0.6 billion against 2022’s £1.1 billion. Its total order book was £0.9 billion compared to last year’s £1.4 billion. The business indicated that rises in mortgage rates had prevented the housing market from returning to “normal levels of activity”.

Matthew Pratt, Redrow’s ceo, said: “During the year under review, we have taken several important strategic decisions to maximise sustainable value for our stakeholders, while delivering 5,436 homes (2022: 5,715).

“Cost of living and mortgage affordability continue to have a negative impact on the market. Where appropriate, we’ve used targeted sales incentives to convert buyer interest into reservations. Following several consecutive Bank of England base rate increases, we remain hopeful that, as inflation eases, we will see some stability in mortgage rates.”

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