Vistry’s average new build home selling rises to £376k as builder flags signs of improvement in UK property market
- Vistry said the UK housing market was showing signs of improving
- Group’s share price up today, but have fallen around 27% in the last year
Vistry Group has flagged signs of improvement within the UK property market as the housebuilder posted better-than-expected full-year profits.
The company, which encompasses brands including Bovis Homes and Linden Homes, unveiled a 21 per cent rise in adjusted pre-tax profit to £418.4million.
On a statutory basis, the firm’s annual pre-tax profit fell by 22.5 per cent to £247.5million, with £97million was set aside for fire safety provisions.
The group’s private average selling price increased to £376,000, up from £356,000 a year ago, as ‘affordable’ average selling prices increased to £163,000 from £158,000 in 2021.
Higher prices: Vistry’s private average selling price increased to £376,000
Annual revenue jumped 13 per cent to £2.7billion, while completions increased 8 per cent to 11,951.
Vistry said it was seeing an improved sales trend in the first 11 weeks of the current fiscal year, with year-to-date average private sales rate per site per week at 0.54, rising to 0.62 in the last four weeks.
The group said: ‘We have seen increased consumer confidence from Q4 2022, particularly as mortgage rates have trended downwards and availability has improved.’
Vistry shares rose today and were up 3.55 per cent or 26.00p to 758.00p in early morning trading, having fallen over 27 per cent in the last year.
Reflecting lingering challenges in the market, Vistry recommended a final ordinary dividend of 32p a share, down from 40 per per share a year ago. The total dividend for the year came in at 55p for 2022, down from 60p a share the previous year.
The group, which often works with local authorities and housing associations to build affordable homes through its Partnerships business, said it expected group adjusted pre-tax profit for this year to top £440million.
Vistry, which snapped up rival Countryside last year, said the merger had boosted growth across its Partnerships arm and it was confident of achieving annualised synergy benefits of about £60million, up from a previous target of £50million.
On dealing with higher costs, the group said: ‘On costs, our business units are working closely with our preferred suppliers, and in particular our subcontractors to deliver cost efficiencies whilst maintaining a quality supply. Working capital is tightly managed on a site by site basis and Housebuilding is selectively acquiring land and is seeing increased success in securing land with deferred payment terms.’
Earlier this month, Vistry reportedly told hundreds of employees that they could be at risk of losing their jobs, amid a cost-cutting drive.
Greg Fitzgerald, the group’s chief executive, said: ‘2022 was another landmark year for the Group as we delivered a step up in financial performance and made excellent progress across all areas despite the more challenging market conditions experienced in the fourth quarter.
‘The combination with Countryside presents a unique opportunity and has created one of the country’s leading homebuilders, comprising a leading partnerships business and a high quality major housebuilder.’
He added: ‘ We are focused on maximising the opportunities from our unique market position and increasing the supply of high quality housing across all tenures.
‘Market conditions are improving and based on the assumption that private sales rates continue to trend towards levels seen in 2019, we expect Group adjusted profit before tax for FY23 to be in excess of £440million.’
Zainab Atiyyah, an analyst at Third Bridge, said: ‘Vistry looks set to enjoy a more steady 2023 thanks to their focus on affordable housing and merger with Countryside Partnerships.
‘This should improve Vistry’s ability to move towards more high return, less cyclical revenues, Our experts expect higher completions and average selling prices in the second half of 2023.
‘Margins pressure remains although sales rates are starting to normalise as Vistry offers more discounts and incentives.’
Analysts at Peel Hunt, said: ‘Fiscal year 2023 could be a seminal year for Vistry as a softer housing market provides an opportunity for the Partnerships business to stand out.’