Reporting on its results for the year ending July 2 2023, Redrow stated that the market remained tough following consecutive interest rate rises and compounded by a “general rise in the cost of living”.
The housebuilder noted that 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 billion, remaining 'stable' due to a rise in the average selling price of homes which had been factored into it’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.
Redrow reported that due to land investments made two years ago, it was able to increase the number of average outlets during the financial year to 117 against last year’s 111. However, this was three below the original guidance, thanks to planning delays.
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.
“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.”