Vistry Group, one of Britain’s largest housebuilders, has announced it expects to make a £30m loss in the first half of the year after implementing significant discounts to clear unsold housing stock.
The company’s shares fell 8% following the announcement, which also revealed the departure of its finance director. The firm had £600m worth of unsold private homes at the start of the year, which it has reduced to less than £300m through discounting strategies.
Market conditions deteriorate
The average discount offered to private buyers reached 7.1%, up from 1.4% in the first half of last year. Vistry attributed the losses to weak consumer demand and lower confidence, exacerbated by uncertainty surrounding the Middle East conflict and rising mortgage rates following higher inflation.
Adam Daniels, who took over as chief executive three months ago, has implemented the price cuts to address inventory levels. The company stated that £190m of the stock reduction will complete between now and December.
“After a positive start to the year, market conditions worsened in the second quarter, reflecting increased uncertainty and lower customer confidence,” the company said. It added that it is “not anticipating a significant change in open market conditions in the second half, or in early 2027.”
Cost-cutting measures
Vistry is seeking to reduce its annual cost base by £25m through voluntary redundancies and selective hiring. Less than 5% of its 4,400-strong workforce have applied for redundancy so far.
Chief financial officer Tim Lawlor will leave in October after four years with the company to take up a similar role in a privately owned business in a different sector.
In recent years, Vistry has shifted its focus towards building social homes in partnership with housing associations, local authorities and build-to-rent investors. The company is currently negotiating new framework deals with 10 of its main partners, though concerns remain over the timing of state funding under Labour’s £39bn social and affordable housing programme.
Analyst concerns
Anthony Codling, housing analyst at RBC Capital Markets, questioned the company’s latest guidance, suggesting the announcement represented a “missed opportunity” to address potential delays in government funding deployment and market deterioration.
After a series of profit warnings in 2024, primarily caused by losses at its south division, Vistry reorganised its operations. However, its share price has lost almost two-thirds of its value over the past year.
The company rebranded from Bovis, which faced criticism for poorly built houses a decade ago. It acquired the housebuilding division of Galliford Try for £1.1bn in 2020 and purchased rival Countryside for £1.3bn in 2022.
Vistry and its Countryside Partnerships division are among large housebuilders facing a multibillion-pound class action lawsuit over allegations of price collusion affecting homebuyers.
The results highlight ongoing challenges in the UK housing market, where demand-side pressures continue to affect major housebuilders despite a widely acknowledged housing shortage.
