The group posted a 4 per cent drop in underlying pre-tax profits to £395 million for the year to July 2 as revenues dipped to £2.13 billion from £2.14 billion on a 5 per cent drop in home completions.

Its average private reservation rate per week for the year slumped to 0.46 down from 0.68 in 2022, while it said trading had worsened over the summer – with the reservation rate almost halving to 0.34 in the first 10 weeks of the new financial year.

Redrow cautioned that pre-tax profits are set to slump by up to 54 per cent in the year to next July – to between £180 million and £200 million – with revenues to fall to between £1.65 billion and £1.7 billion.

Housebuilder Redrow has posted falling annual sales and profits and warned it expects a steep drop in earnings over the year ahead as the property market remains "challenging and uncertain". Picture: Gareth Fuller/PA Wire

Redrow said: “Following the macroeconomic volatility of the last financial year, as we go into 2024 the market remains challenging and uncertain.”

Housebuilders have been hit hard by falling demand as soaring mortgage rates have had an impact on buyer finances.

Rivals such as Barratt Developments and Berkeley have also revealed the toll taken from the difficult market, with many in the sector resorting to increasing incentives to drum up demand.

Official economic data released separately on Wednesday revealed that output in the construction sector fell 0.5 per cent in July, with private housing new work down 2.2 per cent.

And data last week showed house prices are falling at their fastest annual rate since 2009, down by 4.6 per cent to £279,569 in August, according to Halifax.

Matthew Pratt, chief executive of Redrow, said the firm hopes an improvement in market conditions could be on the way.

“Cost of living and mortgage affordability continue to have a negative impact on the market,” he said.

“Where appropriate, we’ve used targeted sales incentives to convert buyer interest into reservations.

“Following several consecutive Bank of England base rate increases, we remain hopeful that, as inflation eases, we will see some stability in mortgage rates.

“The reduction in mortgage volatility will enable potential customers to progress the purchase of their home with financial certainty.”

Redrow sees annual profits fall in 'uncertain' housing market and warns over earnings in year ahead