FTSE 100: Redrow shares up as its average house price climbs to £483,000

Redrow  A general view of new homes being built on the Ebbsfleet Valley development in Kent.
Redrow expects its revenue to be flat year on year. Photo: PA

Housebuilder Redrow (RDW.L) reported a rise in the average selling price of its homes to £483,000 ($567,211).

The 6.9% increase in the average selling price of the group’s private reservations for the first 18 weeks of the financial year means houses were £31,000 more expensive.

The London-listed company said the increase was due to general house price inflation, combined with geographical and product mix.

However, Redrow cut its guidance for 2023 revenue as it reported a drop in net private reservations.

The value of Redrow’s net private reservations in the first 18 weeks of the financial year was 19% below the prior year at £515m.

“The housing market had returned to normal following the elevated sales rate in the previous two years. However, recent instability in financial markets has had a negative impact on the housing market and the business has had to adapt to the changing economic outlook,” chairman Richard Akers is set to tell shareholders.

Citing the current economic uncertainty, the group said it was “being selective and limiting our land buying for the time being”, having added 724 plots to take its holdings to just under 1,500 plots.

The private revenue per outlet per week was £238,000 compared with £310,000 last year.

Redrow said it now expects revenue for 2023 to be around £2.1bn, in line with the prior year and down from previous guidance of £2.3bn to £2.4bn.

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The operating margin is expected to be around 18%, versus 19.3% a year earlier.

The forward order book has shrunk to £1.36bn from £1.49bn a year ago and £1.44bn in early July this year.

Homes turnover for the first 18 weeks of the financial year was 1.7% above last year at £650m.

Redrow said it still estimates that overall build cost inflation will be around 7% for the current financial year.

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