Price of new homes soars faster than rise in building costs, reveals Redrow

The cost of buying a Redrow home has increased nearly three times as fast as the cost of building one despite squeezes on supply chains, the company revealed on Friday.

Redrow said it was working with suppliers to make sure that it could keep building at the same pace as in the past, but that pressures were pushing up prices.

It said that building costs are expected to increase by about 5% in the current financial year due to the squeeze.

It did not reveal where these cost increases had been most pronounced but, on Thursday, rival Taylor Wimpey said that prices of materials and a shortage of haulage drivers were putting pressure on its business.

But, like its larger rival, Redrow seems to be more than offsetting these price rises by increasing house prices.

Customers paid an average of £453,000 for one of its homes in the first part of the financial year, a full £55,000 higher than a year earlier.

Chair Richard Akers said: “Our Heritage range of houses in great locations fits people’s requirements perfectly for quality, well-designed homes with more space to live and work.”

“This is increasingly reflected in the pricing of our homes and in combination with geographical and product mix, increasing desire of our customers to personalise their homes, and general house price inflation, has resulted in the average selling price of private reservations for the first 19 weeks being up 14% on the equivalent period last year.”

It comes despite a drop-off in demand. Reservations per active Redrow outlet fell back to 0.68, compared to last year’s unusually high 0.75.

Yet the price rises mean that the value of homes that have been reserved actually grew by 2% to £672 million.

“We entered the new financial year with a robust housing market and trading has remained strong,” Mr Akers said.