First-time buyers lured with cheap homes

REDROW threw down the gauntlet to its rivals today by launching a new range of super-cheap homes with selling prices starting at £49,995.

Dubbed 'Debut by Redrow' and starting in Rugby, the houses are aimed at helping first-time buyers get on the property ladder.

Deputy Prime Minister John Prescott last year challenged the housing industry to build homes for sale under £60,000 to boost numbers of first-time buyers, currently languishing at 25-year lows.

Redrow's response follows a recent warning from John Calcutt, head of housebuilder Crest Nicholson, that Prescott's plans were in danger of producing the box-like housing estates of the 1970s and 1980s.

{1}Redrow's interim pre-tax profits to 31 December rose 22% to £69.1m and the dividend is lifted 20% to 3.6p.

Chairman Robert Jones said the new range of homes offered a high-quality, more sustainable range. He they would encompass modern methods of construction, and the cheap price would provide a leg-up onto the housing ladder for first-time buyers.

The average price of Redrow homes hit £176,700 - 16% higher than the corresponding period last year, when homes sold for £152,700, which Redrow said partly reflected geographic and product mix. But there were suggestions that the market would soften towards the end of 2005.

'The average selling price achieved in the first six months of the financial year is likely to be marginally higher than that for the year as a whole,' the company said.

Ikea recently announced that it would start selling flat-pack homes, also aimed at first-time buyers, for £70,000. The homes should be available in stores within months.