“Bounce back” for the new homes market

Along with the announcement of its half year results Redrow says the early weeks of 2019 have seen the new homes market “bounce back” after a subdued end to 2018 and the firm is confident that the Brexit uncertainty will not have “a huge impact” this year.

For the period to the end of December 2018, Redrow reported completions up 12% to 2970 bringing the total for the year to 6042 (excluding JVs). Revenue in the period was up 9% to £970 million and pre tax profit up 5% to £185 million.

Redrow ceo John Tutte said that before Christmas the market had dipped but the last few weeks have been better: “The market fell away at the end of November into December about the time of the (Brexit) meaningful vote so we didn’t generate the leads in  December which impacted January. But there has been improvement into early February – overall we are about 6% down and if you’d offered me that in December I would have taken it.”

Tutte said that the market was showing resilience despite the ongoing political uncertainty, although he added that “London is different” as many people in the capital work in the financial sector which is more affected by Brexit.

Redrow chairman Steve Morgan, presenting his final results before retiring in March 45 years after founding the company, urged the government not to let the Brexit deadline stretch beyond March 29th.

“There is a tendency to blame everything on Brexit – it is highly disruptive of course but people just want to have it over and done with and we hope it is not delayed beyond March 29th,” he said. Morgan said stamp duty was a bigger problem than Brexit, affecting transactions in London and beyond.

Tutte endorsed this view: “Overall housing transactions have been flat at 1.1 million for a few years and this is due to stamp duty – stamp duty on a £500,000 house is £15,000 and people are saying ‘we’re not going to pay it’.”

Tutte said that the firm would not change its strategy ahead of changes to Help to Buy which will see regional price caps come into force beyond 2021 but felt that the thresholds should be revisited before that date.

“The thresholds and boundaries are arbitrary – it’s a postcode lottery,” he said. “The threshold in Stratford upon Avon is £200,000 less than Banbury 20 minutes down the road. There is time for the government to look at that.”

(article from Housebuilder)