Homebuilder Vistry boosts output target as cost inflation softens
In a welcome boost for the UK housebuilding sector, construction company Vistry has announced a 10 per cent rise in profit for the first half of the year to £227m.
Total home completions rose eight per cent to 7,750 units in the first six months of 2024. The company said it is “on track” to deliver 18,000 houses in 2024, up from 16,118 in 2023.
Chief executive Greg Fitzgerald said: “The group delivered a strong performance in the first half, which underpins the board’s confidence in its expectations for the full year.
“Our partnerships model is significantly outperforming the broader housebuilding market and we are confident we will deliver over 18,000 completions for the full year and make progress towards our medium term targets.”
The boss added: “We look forward to working with the new government to address the country’s housing crisis, and we are extremely well placed to support its ambition of delivering the biggest boost to affordable housing in a generation.”
“[We] are supportive of [Government] plans to introduce mandatory housing targets, reform the national planning policy framework, add new planning officers and prioritise brownfield and ‘grey belt’ land,” the company added.
Vistry said it has benefited from lower building material costs throughout the first half of the year due to “engagement with [the] supply chain” and expected the cost benefits to continue into the year’s second half.
Demand was mixed in the period, as the open market for houses remained “relatively constrained”, the company said, reflecting “ongoing macro and political uncertainty and the higher interest rate environment.”
However, the news will be a welcome boost for the UK housing sector, which is struggling under a chronic undersupply of houses.
The group’s net debt position remained broadly in line with June 2023, at £323m, while it continued to carry out the £100m share buyback programme started in April this year.
It reiterated its commitment to return £1bn of capital to shareholders within three years through a combination of ordinary dividends and special distributions.
“A Labour government could provide a tailwind for Vistry compared to other traditional homebuilders,” Tanmei Tang, analyst at Third Bridge, said. “With promises of 300,000 houses annually, they are expected to release more land and offer taxation support, along with backing on planning, particularly for affordable housing.”
“The market is perfect for Vistry given the sluggish private sales market. The real question lies in what unfolds as interest rates decrease and private market activity picks up,” Tang said.