Vistry reports 12% drop in home completions as policy uncertainty weighs on demand

Vistry Group said home completions fell 12% in the first half of the year as policy uncertainty and funding constraints hit demand for affordable housing, sending statutory profits sharply lower.

The FTSE 250 builder completed 6,889 homes in the six months to June 30, down from 7,792 a year earlier, and reported statutory pre-tax profits of £40.9 million, a 55% decline. On an underlying basis, pre-tax profit fell 33% to £80.6 million and the group's operating profit margin declined 23%.

Vistry said homes funded by its affordable homes partners, which account for about 73% of its completions, fell 14% to 5,055 as partner demand softened amid what the company described as "the expected lower level of demand" ahead of the June Spending Review and because of transitional funding constraints. The developer also said national planning reforms had not yet filtered down to local decision-making, leaving it "reliant on the ability to appeal for timely conclusions to our planning applications."

Chief Executive Greg Fitzgerald said the group has a pipeline of development opportunities and expects a "significant step-up in completions and profits" in the second half of the year. Vistry pointed to opportunities arising from the government’s new £39 billion, 10-year Social and Affordable Homes Programme and said it was working with partners to bring forward development transactions expected to complete in the second half.

The group’s forward order book stood at £4.3 billion at the end of June, down from £5.1 billion a year earlier. Vistry said market conditions softened in the second quarter amid greater macroeconomic concerns and affordability pressures, particularly for first-time buyers, and that expected interest rate cuts had been pushed further out. To stimulate demand it is offering incentives of up to 5% of open-market sales prices and planning "sales and marketing initiatives."

Average selling prices across the group rose 4% to £283,000, while private open-market sales prices increased 3% to £389,000. Vistry’s net debt fell to £293.1 million and the group completed a refinancing of £900 million in facilities extended to April 2028. The company left its annual guidance unchanged.

This week Vistry announced a long-term joint venture with Homes England to accelerate delivery on large-scale strategic sites. The vehicle, named Hestia, is backed by £150 million from each partner and will target developments ranging from 400 to 3,000 homes.

Analysts reacted cautiously. Anthony Codling, managing director of equity research at RBC Capital Markets, said investing in Vistry remains a call on the speed and scale of public sector funding, noting that the £150 million commitment represents a small proportion of the wider £39 billion programme. Codling said that if government stimulus chiefly boosts the open housing market, Vistry’s focus on social and affordable homes "will not benefit as much as the more traditional mainstream housebuilders."

Mark Crouch, market analyst at eToro, described the broader backdrop as "hostile," citing high interest rates, planning delays and sluggish transactions. He said the Homes England joint venture strengthens Vistry’s position as a partner for affordable housing delivery but added that "with profits sliding and sentiment fragile, even sturdy partnerships may struggle to hold up the roof."

Vistry's shares fell 4.9% on the day of the results, down 29.6p to 574.2p, and have dropped about 58% over the past year. Despite the decline in completions and profits, the group’s management highlighted its balance sheet improvement and access to financing as foundations for a planned recovery in output.

The results come amid broader uncertainty over whether the Labour government will meet its pledge to deliver 1.5 million new homes by the end of the parliament. The pace of new completions across the sector has disappointed since the election, and industry participants and analysts have pointed to planning delays, funding transitions and affordability as persistent constraints on housebuilding activity.

Vistry said it remains engaged with government programmes and partners to accelerate deliveries on strategic sites and to translate national policy changes into local planning outcomes. The company expects Hestia and other partner-led development transactions to contribute to a pick-up in completions in the second half of the year, but noted that some benefits from policy initiatives will take time to materialize at a local level.

The firm's full-year outlook was unchanged, but the first-half figures underline the immediate challenges facing housebuilders reliant on public and affordable housing funding while the wider market absorbs policy shifts and remains affected by economic uncertainty.