Vistry shifts focus to affordable housing
13 Sep 2023
2 Min Read
CW Team
British homebuilder Vistry has announced a strategic shift to concentrate entirely on its affordable housing business amidst a slowdown in the broader housing sector in the UK. This decision has been influenced by the Bank of England's 14 consecutive interest rate hikes, which have impacted profit margins and affordability for potential buyers.
As a result of this shift, Vistry's shares surged by approximately 11% to reach a one-year high of 893 pence during early trading. The overall housing market has been facing challenges, with indicators such as mortgage approvals and house prices showing declines. Mortgage lender Halifax reported a 4.6% annual decrease in house prices, the sharpest drop since 2009.
Vistry's affordable housing efforts, particularly through its Partnerships division collaborating with local government authorities and housing associations, have outperformed its Housebuilding unit, which operates similarly to other builders in the industry. CEO Greg Fitzgerald expressed that the demand for affordable mixed-tenure housing in the UK is growing, and Vistry is uniquely positioned as a leader in this segment.
To emphasise its commitment to affordable housing, Vistry intends to merge its Partnerships business with its Housebuilding operations by the end of the 2023 fiscal year. This strategic move aims to focus on a high-return, capital-light, and resilient model for affordable housing.
Analysts from Peel Hunt noted that this shift removes any uncertainty about Vistry's business model and positions the company in a less volatile segment of the housing market where demand remains high.
Vistry had previously strengthened its Partnerships business through the acquisition of rival Countryside for 拢1.25 billion ($1.56 billion) in September.
Additionally, Vistry plans to return 拢1 billion to shareholders over the next three years and is set to launch an initial share buyback program worth up to 拢55 million in November. Despite reporting an over 8% drop in adjusted pretax profit to 拢174 million for the first half of the year, Vistry reiterated its forecast for annual pretax profit to exceed 拢450 million.
British homebuilder Vistry has announced a strategic shift to concentrate entirely on its affordable housing business amidst a slowdown in the broader housing sector in the UK. This decision has been influenced by the Bank of England's 14 consecutive interest rate hikes, which have impacted profit margins and affordability for potential buyers.As a result of this shift, Vistry's shares surged by approximately 11% to reach a one-year high of 893 pence during early trading. The overall housing market has been facing challenges, with indicators such as mortgage approvals and house prices showing declines. Mortgage lender Halifax reported a 4.6% annual decrease in house prices, the sharpest drop since 2009.Vistry's affordable housing efforts, particularly through its Partnerships division collaborating with local government authorities and housing associations, have outperformed its Housebuilding unit, which operates similarly to other builders in the industry. CEO Greg Fitzgerald expressed that the demand for affordable mixed-tenure housing in the UK is growing, and Vistry is uniquely positioned as a leader in this segment.To emphasise its commitment to affordable housing, Vistry intends to merge its Partnerships business with its Housebuilding operations by the end of the 2023 fiscal year. This strategic move aims to focus on a high-return, capital-light, and resilient model for affordable housing.Analysts from Peel Hunt noted that this shift removes any uncertainty about Vistry's business model and positions the company in a less volatile segment of the housing market where demand remains high.Vistry had previously strengthened its Partnerships business through the acquisition of rival Countryside for 拢1.25 billion ($1.56 billion) in September.Additionally, Vistry plans to return 拢1 billion to shareholders over the next three years and is set to launch an initial share buyback program worth up to 拢55 million in November. Despite reporting an over 8% drop in adjusted pretax profit to 拢174 million for the first half of the year, Vistry reiterated its forecast for annual pretax profit to exceed 拢450 million.
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