Today’s first-half results from Vistry Group PLC (LSE:VTY) offered further vindication of the housebuilder's strategic pivot to a partnership model at the turn of the decade, according to analysts.
Vistry commands a unique position in the UK housebuilding sector in that three-quarters of its house completions are done through ‘partnerships’.
These partnerships are split between public and private, with the former generally comprising local authorities and registered providers (these are organisations that own and develop affordable rented homes), and the latter landowners and institutional private rental operators.
Only around 35% of Vistry’s house sales are on the traditional open market.
While houses built through partnerships command a lower price tag (since they often come under the affordable housing spectrum), the model is less susceptible to the cyclical nature of the housebuilding sector.
“Vistry has won over the sceptics in its transformation,” said investment bank Stifel in response to today’s results.
This has been reflected in Vistry’s share price- the stock is up more than 50% year to date, while fellow housebuilder Barratt Developments PLC (LSE:BDEV) languished in the red.
But “further rerating is possible as the capital base reduces and returns improve further”, said Stifel, adding that the new £130 million buyback “is a further step on this journey”.
How much is a Vistry house?
The average selling price of partner-funded homes increased to £241,000 in the first half of 2024, up from £214,000 in the first half of 2023.
Vistry attributed this increase to the higher proportion of private-partnership sales in the first half of 2024, “which tend to be larger or higher value than affordable tenures”.
Proactive has reached out to Vistry for clarification on the average selling price of a public partnership house.
The average selling price of Open Market homes was £376,000, down from £389,000 in 2023, with the small decrease attributable to a change in the site and geographic mix.
“Overall, the market remained relatively constrained during H1 reflecting ongoing macro and political uncertainty and the higher interest rate environment,” said Vistry.
Vistry is bucking the trend
Aarin Chiekrie, equity analyst, Hargreaves Lansdown, said of Vistry’s latest results: “Vistry looks to be bucking the trend of a housing market slowdown. Its transformation into a Partnerships giant, which specialises in providing affordable housing, has helped it outperform the more traditional housebuilders of late.
“This strategy of delivering high volumes of affordable housing is well aligned with the new government’s ambitions to address the country’s housing shortage.
“New home completions landed at just under 8,000 in the first half, giving Vistry the confidence to reiterate its full-year guidance of over 18,000 new homes.”