Property developer Redrow reported falling annual sales and profits and warned profits could more than halve next year amid a “challenging and uncertain” property market.
The group reported a 4% fall in underlying pre-tax profit to £395m for the year to July 2, as revenue fell from £2.14bn to £2.5m due to a 5% fall in house completions. £13bn fell.
The average weekly private reservation rate for the year fell to 0.46 from 0.68 in 2022, amid worsening trading over the summer – with the reservation rate almost falling to 0.34 in the first 10 weeks of the new financial year halved.
Redrow warned that pre-tax profits would slump by up to 54% to between £180m and £200m by July next year, while revenue would fall to between £1.65bn and £1.7bn.
Redrow said: “Following the macroeconomic volatility of the last financial year, the market remains challenging and uncertain heading into 2024.”
The cost of living and mortgage affordability continue to negatively impact the market
Homebuilders have been hit hard by falling demand as rising mortgage rates have impacted buyers’ finances.
Rivals such as Barratt Developments and Berkeley have also revealed the toll the difficult market is taking, with many in the industry turning to increasing incentives to boost demand.
Official economic data released separately on Wednesday showed that production in the construction sector fell 0.5% in July, while new private housing construction fell 2.2%.
And data last week showed house prices falling at the fastest annual rate since 2009, falling 4.6% to £279,569 in August, according to Halifax.
Matthew Pratt, CEO of Redrow, said: “The cost of living and mortgage affordability continue to have a negative impact on the market.
“Where appropriate, we have used targeted sales incentives to convert buyer interest into reservations.
“Following successive Bank of England rate hikes, we remain hopeful that as inflation eases we will see some stability in mortgage rates.
“Reducing mortgage volatility will allow potential customers to move forward with the purchase of their home with financial security.”
https://www.standard.co.uk/business/business-news/redrow-sees-annual-profits-fall-and-warns-over-earnings-in-year-ahead-b1106646.html Redrow expects annual profits to fall and warns of profits in the coming year