Redrow chairman warns on rocketing house prices

Redrow, the Cheshire-based builder with a reputation for accurately predicting the housing market, has turned cautious on London house prices. And, as its own profits soar, it sees no sign of a boom. Magnus Grimond reports.

Steve Morgan, Redrow's multi-millionaire executive chairman, correctly called the top of the market in the late 1980s. Yesterday he said he felt "uncomfortable" with house prices which have jumped more than 20 per cent in the last 12 months. "I don't see a major collapse of the London market, as we saw in '88, but it is still prudent to be cautious and we are not keen to be overexposed to it", he said.

However, he said there was "absolutely no sign" of a boom in the rest of the country and, indeed, there was some evidence that interest rates were starting to dampen prices, although the death of the Princess of Wales had also taken its toll.

His comments came as Redrow reported a 36 per cent rise in pre-tax profits to pounds 36.1m for the 12 months to June. The results were produced with a 16 per cent rise in completions to 2,629 houses and an 8 per cent rise in the average selling price to pounds 94,000.

The group said the average plot replacement cost for its land bank had jumped to pounds 20,000 in the past year, compared with a historic average of pounds 15,650.

Robert Jones, former Conservative minister for planning and construction, has been appointed a non-executive director.