Redrow and MJ Gleeson put up house prices to return bumper profits

Two major British housebuilders have avoided the impact of rising costs for building materials and workers by jacking up prices for customers, they revealed on Thursday.

Redrow said it had made a £203 million pre-tax profit and earned record revenues in the first half of the financial year as house prices spiked.

The average Redrow home sold for £419,000. That amount is 8% more in the six months to the beginning of January compared to the same period a year earlier.

The rise in the house prices “exceed build-cost inflation”, the business said, so it more than offset the increased costs for labour and materials. It helped lead to a 17% jump in profit.

Redrow’s smaller rival, MJ Gleeson, reported a similar outcome, saying that “unprecedented cost increases have been offset by selling price inflation”.

The builder, which prides itself on “much-needed affordable homes”, said the average selling price had risen 14.7% to £161,200.

Profits rose 22% to £24.7 million, the housebuilder said.

MJ Gleeson boss, James Thomson, said: “The group performed strongly during the first half and this result, and indeed our performance throughout the pandemic, is evidence of the underlying strength of the business.

“We expect Gleeson Homes to deliver 2,000 homes this financial year and Gleeson Land to complete further sales in the second half of the financial year.

“Consequently, in the absence of any further Covid-19 or supply chain related disruption, the board is confident that results for the full year to 30 June 2022 will be ahead of market expectations.”

Redrow said that it had more than tripled to £36 million the amount of money it thinks it will need to take down dangerous cladding in the wake of the Grenfell disaster.

Redrow chief executive, Matthew Pratt, said: “We are very aware of the stress and burden experienced by residents of high-rise apartments that have fire safety issues.

“We share the Government’s desire to resolve this issue and are committed to being part of the solution.

“As we are predominantly a builder of family detached houses, we have historically only developed a relatively small number of high-rise apartment schemes.

“It is important that the whole industry plays its part in tackling the cladding issue, not just housebuilders.”