Redrow returns to profit under Steve Morgan

Redrow has become the latest housebuilder to see an upturn in its fortunes , returning to the black over the last year. Its chairman, Steve Morgan, said the housing market had been "pretty steady" but warned that a lack of first-time buyers would hold back the recovery. Morgan said it was a "sad" reflection on society that the average age of an unassisted first-time buyer is now 37 years, with the latest report from the National Housing Federation suggesting that this will increase to 43 for today's 21-year-olds. "Market improvement cannot be achieved without the first-time buyer stimulating the chain," he said, urging the government to intervene. He proposed an insurance indemnity scheme to enable lenders to provide up to 90%-95% mortgages once again to first-time buyers, or at the very least provide a first-time-buyer tax break. Morgan said "the market behaved very strangely" last year when it began to recover from its slump. Normally there is a dip over the summer when people go on holiday and an uptick in the autumn. "Last year there was no real difference between spring, summer and autumn. This year we had more of a drop-off in the summer. We're hoping that we're going to see an uplift in the market in the autumn." Pointing to the government's austerity measures, he said that, into 2011, "we're not expecting the market to boom in any way but we're not expecting it to drop off either". Morgan, who returned to take the helm last year after a nine-year absence from the company, brought in new management and took the group back to its roots, building traditional family homes. He launched the New Heritage Collection with an average selling price of £180,000, 15% higher than the previous product range. The range has proven "extremely popular" and is expected to boost sales in the current year. "Steve Morgan and his new management team have this morning demonstrated what can only be described – we believe – as a master class in business recovery," said Mark Hughes at Panmure Gordon. The housebuilder made a £700,000 profit before tax and one-off items in the year to 30 June, compared with a £44.2m loss last year. Completions climbed 22% to 2,587 and the gross margin jumped to 10.5% from 1.8%. But unlike some rivals that have restored dividend payments to shareholders, Redrow did not declare a dividend.