Vistry plans to increase the number of properties it builds this year, thanks to booming demand for its affordable homes busniess.
The property developer told investors on Thursday it expects to build 17,500 more homes in 2024, up from the 16,118 delivered in 202.
In September, Vistry announced it was merging its housebuilding division with its partnership business to focus on addressing the under-supply of affordable homes.
Property developer Vistry expects to build 17,500 homes in 2024 as demand for affordable homes grows
Its partnership model – which sees it partner with registered providers, local authorities and the private rented sector to build homes – now accounts for two thirds of sales.
Chief executive Greg Fitzgerald said: ‘As a leading Partnerships business, the group is committed to creating quality new homes through the development of sustainable new communities and places people love.
‘We see high demand for mixed tenure housing and regeneration across the country and are uniquely placed to deliver on this market opportunity, helping address the country’s acute need for housing.’
Despite challenges in the market, Vistry reported an adjusted pre-tax profit of £419million in 2023, up marginally from £418.million the previous year, and beating analyst forecasts of £406million.
By contrast, rival Persimmon earlier this week said it would built fewer houses this year after posting a bigger-than-expected 52 per cent slump in 2023 profit.
Similarly, Taylor Wimpey reported that its earnings had almost halved in 2023.
Builders suffered a slowdown in demand for homes in 2023 as rising mortgage rates put buyers off, while firms have also been hit by the rising cost of materials and wages.
Consequently, last year saw a significant drop in the number of new homes built and sold.
Contracts awarded for construction projects in the UK fell by £11.1billion to £69.2billion in 2023 after a record prior year, with residential housebuilding deals slumping by 13 per cent, according to industry analysts Barbour ABI.
RBC equity analyst Anthony Codling said: ‘The partnership model is working well for Vistry. The visibility of volumes provided by contracts shields it from the vagaries of the open market.
‘The speed at which Vistry has transitioned to partnership sales, which made up 67 per cent, of completions in FY2023 is impressive and the Group remains confident of achieving its three medium term goals: 40 per cent ROCE , £800m operating profit and £1bn return to shareholders.
‘There is still a way to go, and the partnership market is not immune from (funding) headwinds, but Vistry has entered Spring with a spring in its step.
‘In our view the valuation is full and is pricing in perfect delivery of the Group’s goals, therefore on a sector relative basis we believe investors can find better value and upside elsewhere.’
Vistry shares rose 0.45 per cent on Thursday morning, having risen 47 per cent in the last year.
