Housebuilder Redrow is ecstatic about its annual profits returning to pre-pandemic record levels, but the company is expressing concern about the cooling housing market in the midst of the cost-of-living crisis.
According to the organization, the formerly robust market was “moderating,” and there was a return to “more typical” purchaser demand as a result of skyrocketing inflation and quickly growing interest rates.
Halifax and Nationwide, two major UK mortgage lenders, both reported slower yearly price increase in August, adding to growing evidence of waning demand in the country’s real estate market.
As of right now, we are witnessing the return of a market that is more normal, where demand is slowing to historical levels.
Redrow has high hopes that its robust forward order book, which had increased by 1% as of July and stood at £1.44 billion, will help it weather the larger economic troubles while it celebrates a “great” previous year for the firm as a whole.
According to the findings, the company’s underlying pre-tax profits increased by 31% to £410 million in the year that ended on July 3, reaching all-time highs not seen since before the pandemic.
“Over the past two years, the market has been extraordinarily strong with higher demand,” said Matthew Pratt, group chief executive of Redrow. “This is partially a result of people’s shifting priorities surrounding working from home.”
“We are now witnessing the restoration of the market to a more normal state, in which demand is gradually returning to levels seen in the past.”
According to the report, the recent slowdown should not have come as a surprise “given growing inflation and higher interest rates.”
The total revenue for the year came in at 2.14 billion dollars, up 10% over the previous year.
Private sale house prices increased by 9%, reaching an average of £428,200. This helped more than offset increasing build costs, which climbed 10% higher over the course of the year, despite the fact that Redrow stated that material shortages and supply issues were resolving.
According to statutory accounting, the company’s pre-tax profits dropped by 22%, coming in at £246 million. This was owing to the company setting aside £164 million as part of its commitment to addressing high-rise block fire safety issues in the wake of the Grenfell Tower tragedy.