Vistry profits tumble as home buyers remain wary

Housebuilder Vistry has seen half-year profits more than halve as buyer demand comes under pressure from worries over the wider economy and slower-than-hoped cuts to interest rates.

The group reported pre-tax profits tumbling 55% to £40.9 million in the six months to June 30.

On an underlying basis, profits fell 33% to £80.6 million, down from £120.7 million a year ago, while house completions fell 12% to 6,889 in the first half.

Vistry – formerly Bovis Homes group – said its forward order book was lower than a year ago, standing at £4.3 billion against £5.1 billion this time last year.

It said it was looking to boost flagging demand with “sales and marketing initiatives”.

“In the open market, whilst we reported some positive momentum in the first quarter, market conditions softened somewhat in the second quarter, reflecting increased macro concerns and ongoing affordability challenges, particularly for first-time buyers, with expected interest rate cuts being pushed further out,” Vistry said.

The firm said it was offering incentives of up to 5% of the open market sales prices to buoy demand.

Prices rose by 3% for private open market sales in the first half to £389,000 on average, but it said sales rates were flat.

The Bank of England cut rates to 4% in August, down from 4.25%, but experts are expecting further reductions to come at a far slower pace amid stubbornly high inflation.

Some do not believe the Bank will cut rates again before the end of the year.

This is impacting homebuyer spending power and confidence, according to Vistry.

Halifax reported last week that annual house price growth eased to 2.2% in August, down from 2.5% in July and 2.7% in June.

This came despite a month-on-month rise of 0.3% in August to a new record high of £299,331 on average.

“We are looking to drive an improvement in our open market sales rate in the second half through our sales and marketing initiatives albeit we remain mindful that demand will continue to be influenced by macroeconomic uncertainties,” it said.

The group said it remained on track for full-year expectations.