Vistry gets a boost from affordable housing work

Rental sector and affordable housing work boosted housebuilder Vistry despite industry fears of a UK property market slowdown.

The FTSE 250-listed group told investors on Wednesday it is on track to meet its adjusted pre-tax profit expectations of around £418million for 2022, up 21 per cent from a year earlier. 

Forward sales of private homes stood at £1billion at the end of last year, down from £1.3billion at the end of 2021.

Vistry last year completed a £1.1billion acquisition of Countryside Partnerships, which significantly bolstered its affordable homes division. 

‘We are seeing a sustained level of demand across Partnerships from Housing Associations, Local Authorities and the private rented sector, with a strong Q1 pipeline’, the group said.

The group built 6,774 homes in the last year, up from 6,551 the previous year. The total of private homes completed came in at 5,184, up from 4,891 a year ago. 

Vistry said it completed 1,600 ‘affordable’ homes in the last year, up from 1,590 the previous year. 

Average selling prices increased by around 6 per cent to £324,000, against £305,000 a year ago, which the group said reflected ‘changes in mix and house price inflation across the year’. 

It added: ‘Housebuilding’s private average selling price increased to c. £376k (FY21: £356k) and affordable average selling price increased to c. £163k (FY21: £158k).

‘Housebuilding operated from an average of 142 (FY21: 143) active sites in FY22 and we expect this to be at a similar level in FY23.’

Land acquisitions came in at 5,352 by the end of the year, compared to 7,667 the previous year. The group said: ‘The rate of land acquisition in Housebuilding consciously slowed in the fourth quarter reflecting the increased level of uncertainty in the housing market.’

Buyers pay more: Average selling prices increased by around 6% to £324,000, Vistry said

Vistry shares rose today and were up 1.2 per cent or 9.00p to 756.00p in late morning trading, having fallen over 30 per cent in the last year. 

Shares in fellow housebuilder Persimmon rose slightly today, but have slumped by over 40 per cent in the last year.  

Greg Fitzgerald, Vistry’s chief executive, said: ‘2022 was another year of excellent progress for Vistry, and despite the more challenging market conditions following the September mini-budget, profits are in-line with expectations and ahead of where we were at the start of the year.

‘We start this year focused on maximising Vistry’s unique capability as a leading housebuilder and partnerships business to increase the delivery of high quality housing across all tenures. 

‘The Group’s forward sales position totals an encouraging £4.6billion and we have a strong pipeline of new opportunities within Partnerships. 

‘It is too early in the current year to predict the outturn for private sales, however I remain cautiously optimistic that buyer sentiment will improve over the coming months.’

Vistry’s weekly private sales rate per outlet for 2022 fell to 0.71 from 0.76, but dropped to 0.46 in the fourth quarter, reflecting heightened macroeconomic uncertainty and higher mortgage costs. 

Analysts at Peel Hunt, said: ‘The outlook for Partnership housing continues to look stronger than the mainstream market due to the large shortage of affordable housing. 

‘Vistry’s exposure to this sector is a clear differentiator to the rest of the sector and should allow it to outperform over the medium term.’

Many housebuilders are grappling with a variety of headwinds that could impact sales, including a sharp rise in mortgage costs. Last year political uncertainty also knocked sentiment. 

Data published by the Office for National Statistics today revealed that the average house price increased 10.3 per cent in year-on-year to November to £295,000, £28,000 more than the year before, according to the Office for National Statistics.

But, the average price fell 0.3 per cent or £1,000 compared to October 2022 when the average price reached a record high of £296,000. It was the first time prices went down since October 2021. The annual growth rate also slowed, falling from 12.4 per cent the previous month.