Housing analysts eye Redrow results

PROPERTY watchers will lock their eyes on Redrow on Wednesday for the builder’s thoughts on whether UK government stimulus packages are fuelling a housing bubble in London and the south-east of England.

The group has already told the City that its revenues surged by 26 per cent in the year to 30 June to £604.8 million, stoking criticism in some quarters that Treasury intervention will trigger another house-price crash.

Westminster’s schemes such as Help to Buy – which allows people to buy a new-build home with a 5 per cent deposit – plus the Bank of England’s Funding for Lending credit-boosting initiative, have lifted house prices in the south of England.

On Friday, the Royal Institution of Chartered Surveyors (Rics) unveiled proposals to limit house prices rises to 5 per cent a year in an attempt to end boom and bust cycles.

City analysts on average expect Redrow’s pre-tax profits to climb to £65.7m from £43m year-on-year, as it makes more money by building on land acquired cheaply during the downturn, plus selling homes for more.

Last week rival Barratt Developments unveiled plans to pay its first dividend since 2008 after posting a 73 per cent surge in full-year profits to £192m.

But chief executive Mark Clare maintained that there was no housing bubble brewing in England.

Redrow recently said it sold 15 per cent more homes during the year with 2,827 completions, while the average selling price of a private property was £227,300, up from £204,100 a year earlier – prompting a flurry of upgrades from brokers.

The firm is also starting to see the benefits of its London developments, where house prices are racing ahead, and had sold 13 of its Kingston Riverside properties in London by July. Along with other housebuilders, shares in 
Redrow have soared over the past year as analysts also expect to see a marked improvement in margins.

Numis Securities analyst Chris Millington said: “We expect Redrow to confirm that the housing market is improving and that volumes, selling prices and margins are all advancing.

“The market will be focusing on the outlook for the wider market, but more particularly on London and how this will impact results over the next couple of years.”

Galliford Try, the building group that owns Edinburgh-based Morrison Construction, will also unveil full-year results on Tuesday.