Vistry pins hopes on significant step up' in affordable housing deals as profits slump
The FTSE 250 firm told investors on Thursday demand from its affordable homes partners stayed at 'lower levels' in the first half of 2025, owing to funding constraints and uncertainty ahead of the June Spending Review.
However, the UK Government unveiled plans last month to allocate £39billion over the coming decade to deliver around 300,000 new social and affordable homes.
It hopes the funding will help achieve its goal of constructing at least 1.5 million new properties in this Parliament.
The government has also announced a consultation on social rent convergence and a 10-year social rent settlement capping the amount social landlords can increase rents annually at inflation plus 1 per cent.
Vistry said: 'We have worked closely with our partners, identifying a strong pipeline of development opportunities, and expect the funding and other important initiatives to support a significant step up in new contracts with our affordable housing partners in H2 2025.'
Vistry further said it expects to report adjusted operating profits of around £125million for the six months ending June, which was in line with forecasts, although lower than the £161.8million made over the same period last year.
The Kent-based business completed about 6,800 properties, versus 7,792 in the first half of 2024, while the average weekly sales rate decreased from 1.21 to 1.02.
It noted open market demand remained impacted by affordability issues for first-time buyers and anticipated interest rate cuts 'being pushed further out.'
However, sales from the private rented sector continued to be strong thanks to new market entrants and higher investment activity.
Vistry also forecasts higher profits in 2025 on the back of a £4.3billion forward order book, which excludes any benefit from the government's new affordable homes programme.
Greg Fitzgerald, its chief executive, said the combined measures 'drive the delivery of the high-quality affordable homes the country so badly needs'.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, believes the £39billion scheme is 'likely to benefit Vistry more than most other players in the [housebuilding] sector'.
He added: 'Given its low valuation and favourable position in the sector, this could be an attractive time to invest in a housebuilder.
'But potential investors will need plenty of patience and confidence that management has ironed out the operational issues that weighed on performance at the end of 2024.'
Vistry's profits plunged by almost two-thirds to £104.9million last year after it incurred a £92million blow from underestimating building costs in its southern division.
Vistry Group shares were 1.6 per cent lower at 616.2p on Thursday morning and have more than halved over the past 12 months.
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