Redrow reduces losses but warns over mortgage market

HOUSEBUILDER Redrow slashed its first-half losses following a pick-up in the number of sales and an increase in prices but warned that a lack of mortgages is still causing problems.

Completions climbed 21 per cent to 1,266 for the six months to December with
the average selling price of homes rising 3.6 per cent to £145,500.

This helped to lift revenue for the period by 25 per cent to £187.2m while
pre-tax losses dropped by 81 per cent to £8.7m.

Chairman Steve Morgan said the move back towards traditional family housing with the launch of its New Heritage Collection has struck a chord with customers.

However, he lambasted the increasing levels of bureaucracy within the planning system which are slowing the process of getting planning

Morgan, who rejoined Redrow this year after almost a decade away, also echoed the views of his rivals in criticising the lack of mortgage availability which he says is behind the group’s 18 per cent cancellation rate.

"Aside from planning, the other significant obstacle to Redrow increasing output is the chronic shortage of available and suitable mortgage product combined with the persistent and ongoing issue of down valuations by valuers acting for the mortgage lenders.

“Whilst the UK housing market has stabilised, lack of mortgage availability is the biggest drag on the market. It is difficult to see any material recovery in the market from current levels until availability improves significantly," he added.

Last year's £150m rights issue has helped to strengthen the balance sheet
and reduce net gearing from 73 per cent to 11.3 per cent.

Net debt at the UK’s sixth largest housebuilder has fallen to £49.3m from