Barratt Redrow builds on ‘more stable market’ after merger

Barratt Redrow has started to see “more stable market conditions” in its first trading update as a merged group.
Barratt bought its smaller rival Redrow in a £2.5 billion merger announced in February, and the deal was cleared by the competition authorities in early October.
The deal has created a developer with operations that are forecast to deliver between 16,600 and 17,200 new homes in the 2025 financial year. In its first trading update, David Thomas, the group’s chief executive, said the combined entity was “well-positioned” to meet rising consumer demand for housing.
Thomas added: “Whilst customer demand continues to be sensitive to the wider economy, we are beginning to see more stable market conditions with increased mortgage availability and affordability.
“It will take some time for customer confidence to fully recover from the macroeconomic headwinds faced over the past two years, but we are encouraged by the solid trading we have experienced over recent weeks.”
The housing group has launched consultations over the possible closure of five offices as part of plans to deliver post-acquisition cost savings of £90 million. Executives are assessing the merged group’s supply chain to secure procurement savings of £34 million, and office closures could save £33 million. The two companies are also set to share central and support services in a move that could save £23 million.
Anthony Codling, research analyst at RBC Capital, said: “Whilst the acquisition process was somewhat drawn out, timing is everything, and aside from next week’s budget, Barratt has got the keys to Redrow at what we believe to be the inflection point in the UK housing market cycle: the government is supportive of the sector and the trajectory of planning, wages and mortgage rates is a help, not a hindrance.”
The company is also planning to open 45 site sales outlets in the coming years. The Redrow brand is on course to expand across the country and deliver new housing layouts to regional markets already served by Barratt, and the group had a combined forward order book totalling 10,619 homes on October 13. The Barratt Redrow landbank comprises 88,880 plots, which represents a supply pipeline lasting five years.
Shares in the business closed up 12p, or 2.5 per cent, to 485¼p.