Redrow, one of the UK’s largest housebuilders, has announced its full year results, revealing that it has returned to pre-Covid levels of profitability but warned that high inflation was cooling the UK housing market.

Revenue increased 10% to a record £2.14bn in the year to 3 July. Pre-tax profit dropped 22% to £246m from £314m after booking exceptional fire safety costs of £164m. Excluding these costs, underlying pre-tax profit rose by almost a third to £410m.

The London-listed company, like most housebuilders in the UK, has been boosted by rising house prices and high demand for property.

Charlie Huggins, head of equities at investment firm Wealth Club, cautioned: “Make no mistake – the biggest reason for Redrow’s success is high house prices, and the general strength of the housing market.

“That is something over which it has no control, and the big bad wolf of recession could be about to blow away the good times.”

Redrow warned that housing demand was losing momentum, hurt by rising mortgages amid a cost-of-living crisis.

“Given rising inflation and higher interest rates, it is not surprising the buoyant housing market has moderated recently and demand has returned to historically average levels,” said non-executive chairman Richard Aker.

Still, the property developer said its order book has placed it in an “excellent” starting position for the 2023 financial year.

“Excellent progress has been made during the year executing our strategy to grow in the regions. The new Southern business, based in Crawley, officially opened at the end of June but the team has been active in the land market for some time. This division is expected to make a positive contribution to profits in the current financial year.”