Redrow's profits fall by 46%

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Housebuilder Redrow today warned the mortgage squeeze could linger until 2010 as annual profits tumbled by nearly half.

The company welcomed attempts to aid to the housing market unveiled last week under Prime Minister Gordon Brown's attempted fightback, but urged the Government to take action to end the mortgage drought.

"It is our view there may be no meaningful increase in the availability of finance in the wider mortgage market before 2010," chairman Alan Bowkett said.

The Flintshire-based firm continued the gloom from the sector after underlying pre-tax profits fell by 46 per cent to £65.1 million in the year to 30 June.

Including a £259.4 million writedown on plummeting land values, the company slumped to a £193.9 million annual loss.

Redrow added that the speed and scale of the housing downturn was "unprecedented" but had some better news for investors after agreeing a new £450 million debt facility to shore up its finances.

Redrow has cut more than 500 jobs since the beginning of January to cope with a much more difficult trading landscape.

Despite last week's measures - such as raising stamp duty thresholds to £175,000 - the lack of mortgages is crippling the market.

Bank of England figures showed just 33,000 mortgages were approved for house purchase during July - a record low and barely a quarter of the 114,000 approved 12 months earlier.

Redrow said housing completions were down 19 per cent to 3,925 homes in the year to June, but the picture is even bleaker looking ahead.

Forward sales for the current financial year were 45 per cent down, with reservations down 55 per cent, which the firm said would have "implications for volumes" this year.

Activity levels in the 10 weeks since the end of June are 48 per cent below the same period last year - although the market has fallen so low the firm said this was "slightly better" than the first six months of 2008.

The firm's margins however have been squeezed by the need to tempt in buyers with incentives and discounts. It has cut back on land acquisitions in the current market and slashed its final dividend payment to conserve cash.