Housebuilder Vistry saw completions fall 12 per cent in the first half of the year as policy uncertainty weighed on demand for affordable homes. 

Profits sank as the FTSE 250 builder faced a slugging housing market that is yet to feel the impact of Labour’s efforts to boost activity. 

The company completed 6,889 homes in the six months to 30 June, down from 7,792 at the same point a year ago, as pre-tax profits plummeted 55 per cent to £40.9million in the period. 

Homes funded by Vistry's affordable homes partners like local housing associations, which account for 73 per cent of completions, slumped 14 per cent to 5,055.

Vistry blamed 'the expected lower level of demand' on 'uncertainty ahead of the June Spending Review and transitional funding constraints'.

It also told shareholders the government's planning reforms 'have yet to filter down through to local decision-making' and, as a consequence, Vistry remains 'reliant on the ability to appeal for timely conclusions to our planning applications'. 

'The Planning & Infrastructure Bill will hopefully bridge the gap with strategic level solutions, however, will not be an overnight solution,' Vistry said. 

It comes amid growing doubts Labour will be able to achieve its goal of building 1.5 million new homes by the end of this parliament, as the rate of new completions continues to disappoint. 

On an underlying basis, Vistry's pre-tax profit fell 33 per cent to £80.6million, while its operating profit margin fell 23 per cent. 

Vistry, previously known as Bovis Homes, said its forward order book was lower than a year ago, at £4.3billion against £5.1billion this time last year.

It told shareholders it was looking to boost sluggish demand with 'sales and marketing initiatives'.

The housebuilder said market conditioned 'softened' in the second quarter, adding that this reflected 'increased macro concerns and ongoing affordability challenges, particularly for first-time buyers, with expected interest rate cuts being pushed further out'. 

Vistry said it was offering incentives of up to 5 per cent of the open market sales prices in a bid to bolster demand. 

Overall average selling prices increased by 4 per cent to £283,000, with a 3 per cent rise for private open market sales to £389,000.

Vistry shares fell 4.9 per cent or 29.60p to 574.20p on Wednesday, having slumped 58 per cent in the last year.  

The group's net debt fell to £293.1million, significantly better than expected and lower than the prior year, despite a higher opening balance. 

Vistry also completed a refinancing of £900million in facilities, extended to April 2028. 

Chief executive Greg Fitzgerald said:  'Working with our partners, we have a strong pipeline of development opportunities which will drive our second half performance, with an expected significant step-up in completions and profits.'    

Fitzgerald flagged opportunities arising from the government’s new £39billion, 10-year Social and Affordable Homes Programme and stated the group was working with partners to build a pipeline of development transactions expected to complete in the second half. 

The group's annual guidance remained unchanged. 

Joint venture to turbocharge housebuilding 

This week Vistry Group announced it had teamed up with Homes England to create a long-term joint venture aimed at accelerating large-scale housing schemes across England.

The new vehicle, called Hestia, is backed by £150million from both partners and will target strategic sites ranging from 400 to 3,000 homes. 

Earlier this week, Fitzgerald, said: 'As one of the country’s largest providers of affordable homes, we are closely aligned with Homes England and share their ambitions for further affordable housing delivery.

'Hestia represents a bold and collaborative step forward in unlocking the potential of large-scale sites and accelerating the creation of thriving, mixed-tenure communities across England.'

Anthony Codling, managing director of equity research at RBC Capital Markets, said: 'We continue to believe that an investment in Vistry is a big call on the speed and scale of deployment of public sector funding, so far it has been a trickle rather than a torrent, with £150million out of £39billion coming Vistry's way. 

'We expect that figure to grow over time, but we cannot say by when and by how much. 

'If the Government does look to stimulate the open housing market, Vistry, with a focus on social and affordable homes, will not benefit as much as the more traditional mainstream housebuilders, who, in our view, offer a more attractive valuation, yield and risk profile.'

Mark Crouch, a market analyst at eToro, said: 'The broader backdrop remains hostile. High rates, planning delays, and sluggish transactions continue to choke momentum, much of which was expected to ease following Labour’s victory. In that context, the newly signed joint venture with Homes England feels less like a growth lever and more like a lifeline.'

He added: 'The deal positions Vistry as the UK’s go-to partner for affordable, public-private housing delivery. Low-risk, policy-aligned, and capital-light. That narrative still holds but with profits sliding and sentiment fragile, even sturdy partnerships may struggle to hold up the roof.'