Vistry revenue slumps but sees second half recovery

Britain's housing market was shuttered during the two month lockdowns, but construction and sales activity had improved since mid-May and Vistry said it expected the stamp duty exemption announced by the government on Wednesday would support buyers in the months ahead.

The company delivered 1,235 completions in the six months to June 30, down from 3,371 a year ago at a total average selling price of £290,000k. Revenue from housebuilding activities in the period fell to £344m from £854m.

Sales had continued throughout the lockdown with Vistry’s sales rate increasing to an average of 0.62 in the last four weeks and pricing remaining firm, the company said in a trading update. Housing reservations, including partnerships activity totalled £1.66bn and Vistry Partnerships' contracting forward order book was £920m, up from £827m at May 20.

“Given the present economic uncertainty, short-term financial guidance remains suspended. We will provide a further update with our half year results in September,” the company said on Thursday.

Vistry said consumer demand has increased in recent weeks as the government allowed a resumption of building last month.

"House prices have remained stable and we currently see deflationary pressure in our supply chain. This, combined with completions returning to a more normal level and the flow-through of synergy benefits, will support an anticipated restoration of gross margin in the second half and retain the strong value from the margin in our future land bank," it added.

Sector peer Persimmon on Thursday also reported signs of a recovery as sales rates improved.

Hargreaves Lansdown analyst William Ryder said both firms have continued the trend among housebuilders of reporting firm pricing, despite both Nationwide and Halifax reporting falls in their respective house price indices.

"The new homes market is not fully reflective of the broader market, but can be expected to track it reasonably closely. It’s therefore unclear where the market is going, but we suspect it will largely depend on the success of the economic recovery," he said.

"Both Persimmon and Vistry have gotten back to work, although we’re yet to see what social distancing measures have done to margins. In the absence of a second wave of coronavirus infections the costs of the lockdown are now behind us, but social distancing may hurt profitability over the longer term. In any case, house prices are the key variable, and they’re out of the builders’ hands.”