Redrow cheers profits returning to pre-Covid highs but sees market cooling

Housebuilder Redrow has cheered annual profits returning to pre-pandemic record levels but cautioned over a cooling housing market amid the cost-of-living crisis.

The group said the buoyant market was “moderating”, with a return to “more normal” homebuyer demand due to rocketing inflation and rapidly increasing interest rates.

It comes amid mounting signs of dampening demand in the UK property market, with lenders Halifax and Nationwide both reporting slower annual price growth in August.

Redrow put faith in its strong forward order book – up 1% at £1.44 billion as of July – to help it weather the wider economic woes while it hailed an “excellent” past year for the group.

Results showed underlying pre-tax profits jumped 31% to £410 million in the year to July 3, back to the all-time highs seen before the pandemic struck.

Matthew Pratt, group chief executive of Redrow, said: “Over the last two years the market has been incredibly strong with elevated demand, partly resulting from people’s changed priorities around working from home.

“We are now seeing a return to a more normal market where demand is moderating to historical levels.”

It said the recent cooling off was not surprising “given rising inflation and higher interest rates”.

The group notched up a 10% rise in full-year revenues to £2.14 billion.

Private sale house prices rose 9% to £428,200 on average – helping more than offset surging build costs, which leapt 10% higher over the year, though Redrow said material shortages and supply woes were easing.

On a statutory basis, pre-tax profits fell 22% to £246 million as they were knocked by £164 million put aside due to its pledge to address high-rise block fire safety issues in the wake of the Grenfell Tower tragedy.