Redrow has blamed recent financial market turmoil sparked by the mini-budget for a sharp slide in sales of its new-built homes, prompting it to slash its revenue outlook.
In a further sign that the property market is cooling, the FTSE 250 developer said net private reservations fell 19 per cent to £515million in the last four months compared to the same period a year ago.
While it still continued to benefit from rising house prices – with its average selling price up 6.9 per cent to £483,000 – Redrow was cautious about the future.
Redrow has seen sales of its new built homes fall by almost a fifth in recent weeks
It said it had bought just 724 new plots of land – half the 1,495 acquired last year – as it continued to be ‘selective’ due to economic uncertainty.
Its total forward order book was £1.36billion as of the 6 November, almost 9 per cent below last year’s £1.49billion.
Ahead of its annual general meeting today, chairman Richard Akers told investors the housing market had returned to ‘normal’ after the boom experienced during the pandemic.
‘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,’ he added.
The company now expects revenue for 2023 to be around £2.1billionn, in line with the prior year but down from previous guidance of £2.3billion to £2.4billion.
Despite the lowered forecasts, Redrow shares rose 0.4 per cent to 473.80p in morning trading on Friday.
Housebuilders have benefited from booming house prices and government support measures during the pandemic.
But in recent weeks, they have flagged falling demand for properties as the cost of living crisis and rising mortgage rates hit the market hard.
Mortgage rates shot up to over 6 per cent after the widely-criticised mini-budget from former Chancellor Kwasi Kwarteng in September.
This week, fellow developer Taylor Wimpey reported that 24 per cent of home purchases cancelled in the second half of its financial year – up from 14 per cent in 2021 – as the economic climate worsens.
Last month, Barratt, the UK’s largest homebuilder, issued a profit warning following a plunge in reservations.
House prices have already started to fall, with estate agents across the country reporting a downturn in October, according to the latest RICS survey.
Respondents across all parts of the UK are now, on balance, of the opinion that prices will decline to some extent over the next year.