Redrow shares are positive this morning, lifting UK Housebuilding peers along with it – despite a weaker than expected UK Halifax House Price Index print – after reporting a record-breaking set of half-year results, just six months after doing exactly the same with full-year figures; group revenues +20%, profits +26% and completions +14% were all records.

Perhaps most importantly for investors, however, was the company announcing its order book for the second half also achieved a new PB, improving 5% YoY on a tough comparable to top the £1bn mark, while management upped the interim dividend by 50%, always important for income seekers, although short of the prior 83% declared hike in September.

This record-breaking performance comes against a continued back-drop of Brexit uncertainty for UK Housebuilders, and at odds with a number of peers who failed to see generally positive results releases be rewarded with an accompanying share price reaction. Given Redrow’s smaller position in the market compared with bigger brothers Barratt Developments, Persimmon and Taylor Wimpey, the company can afford to bolster growth through increasing completions and stands out as one of the only housebuilders consistently improving this metric by double digits.

Crucially, however, is whether this improvement in completions can be maintained after the UK’s departure from the EU without adversely impacting prices and margins, and whether the sector can weather the threat of reduced labour and demand that comes along with Brexit.

How the sector navigates the key headwind following the negotiating intermission and the second half of the Brexit theatrical performance will therefore be key: Will they drastically increase volumes and hope demand doesn’t take a hit after Brexit? Or stay steady as she goes, maintain the course and hope slower supply increase will filter through into prices?

Henry Croft, Research Analyst, 7 February 2018