Home sales rise at Vistry Group on falling rates - but questions raised over social housing focus

Daily Mail​

14-05-2025

Home sales have ticked up at Vistry Group in recent weeks, as expected interest rate cuts led to lower mortgage costs.
However, an analyst has raised concerns that a lack of clarity on social housing funding from the Government may harm the firm, which builds many of its homes in partnership with organisations such as housing associations.
The housebuilder, formed in 2020 from a merger of Bovis Homes and Linden Homes, said it had sold 0.91 homes per week at each of its developments since the start of 2025, and 1.32 in the last eight weeks.
This is up from 0.59 in the period between January and 26 March, when the company was affected by a subdued volume of partner-funded transactions.
This is where private sector developers build homes on behalf of other organisations, often social housing to be used by housing associations.
Vistry noted partner-funded activity had remained at a 'relatively low level' because of 'investment constraints' while funding for new affordable homes waits to become available.
However, the firm said sales to home buyers had improved as mortgage lenders have broadened their product ranges and slashed borrowing costs in anticipation of further expected cuts to the Bank of England base rate.
Britain's central bank has reduced interest rates by 0.25 percentage points on four occasions since August 2024 in response to decreasing inflation, with the latest cut occurring last Thursday and taking the base rate to 4.25 per cent.
Since then, most major banks have lowered their mortgage rates.
Santander has announced the launch of multiple new mortgage deals with sub-4 per cent rates.
Meanwhile, Barclays introduced the market's lowest five-year fixed rate deal for homebuyers purchasing with a 40 per cent deposit.
Vistry forecasts both open market and partner-funded home volumes for 2025 to be at a 'similar level' to the prior year.
Concern over Government housing funding
An analyst has raised concerns that unclear government funding plans for social and affordable housing could negatively affect firms like Vistry, who focus on'partner-funded' developments.
Anthony Codling, managing director at RBC Capital Markets, said: 'Until the Government announces a significant funding program for social and affordable housing, Vistry may find itself in the wrong place at the wrong time whilst other housebuilders make hay in the warmest spring on record.
'The trading statement is trying to give the impression of "everything is fine and there is nothing to see here."
'But, the statement points to continued weakness in the partner funded model, the market Vistry is focused on, whereas the market it isn't focused on, traditional housing, is doing well.
'Until the Government announce a significant funding program for social and affordable housing, Vistry may find itself in the wrong place at the wrong time whilst other housebuilders make hay in the warmest spring on record.'
In late March, Chancellor Rachel Reeves and Deputy Prime Minister Angela Rayner unveiled an additional £2billion of cash towards building up to 18,000 new affordable homes.
It said the properties would begin construction by March 2027 and be finished by the end of this Parliament in June 2029.
Additional information on how the funding will be allocated is expected following next month's spending review.
The government has promised to deliver 1.5 million homes over five years, partly by allowing building on lower-quality' grey belt' land and mandatory housing targets for councils.
Vistry Group shares were 0.9 per cent lower at 627.4p on late Wednesday afternoon, meaning their value has approximately halved in the past year.