Redrow to restart work on 'mothballed' housing schemes

Housebuilder Redrow said today that it was restarting work on some mothballed schemes and beginning new sites in a glimmer of good news for the beleaguered housing market.

Flintshire-based Redrow said the market had steadied as housing stocks fell sharply in the past year, although it warned of "challenging" conditions until next year due to the mortgage drought and recession.

The group is also shifting focus towards high-quality family housing, and cutting the number of apartments in its landbank.

The change in approach has come since Steve Morgan, who started Redrow in 1974, became executive chairman in March after upping his share in the firm to 29.9%.

Finance director David Arnold said Redrow had begun work again on some sites after running down an oversupply of homes in the past year.

He added that the shift towards family homes reflected Redrow's historic roots and an oversupply of apartments in the last years of the housing boom.

"The industry had got to a position where in 2005, 2006, 2007, the proportion of apartments the industry as a whole was building represented 40%-45% of output," he said.

Redrow was "already along the road" of reducing its apartment output but Wolverhampton Wanderers chairman Mr Morgan's decision to rebuild the business has helped the shift in emphasis, he said.

"Redrow's hallmark and characteristic was that we were very much focused on three- and four-bedroom family homes," Mr Arnold added.

The shift towards family housing should eventually increase average selling prices and the firm's shares rose 5% today after it also said it was "encouraged" by trading since the new year.

The firm has seen lower cancellation rates and, although pricing remains "fragile", it expects Government help for first-time buyers to come through in the months ahead.

Panmure Gordon analyst Mark Hughes said: "Whilst we only have to look at the false dawns experienced in recent years in the US housing market to keep our feet firmly on the ground, in our opinion it is likely that prices will bottom out in most counties in the UK in 2010."