Vistry sees solid demand after stamp duty holiday, but reveals supply cost woes

The housebuilder said material cost pressures are being more than offset by surging house prices across all its regions.

Housing development (PA Wire)

Housebuilder Vistry has cheered a better-than-expected first half and insisted homebuyer demand remains solid past the end of the stamp duty holiday.

But the group – formerly called Bovis Homes – revealed it is seeing pressure on building material supply, which is leading to delays and cost increases.

Vistry said it is “actively managing” the situation and any cost hikes are being more than offset by surging house prices across all its regions.

The firm said it iswell positioned to meet full-year expectations, having recently upped its profits outlook amid the housing market boom.

The group said its average weekly sales rate stood at 0.76 in the first half – up 10% on pre-pandemic levels in 2019, with “sustained demand” for homes set to complete in the fourth quarter even after the end of the stamp duty tax break.

But figures also out on Wednesday from Halifax showed average house prices slipped by 0.5% to £260,358 in June as the full stamp duty holiday came to an end.

It marked the first monthly fall since January, indicating the peak of buyer demand is now likely to have passed, according to the research from Halifax.

Market trends remain positive and we are seeing good demand for completions beyond the end of the stamp duty holiday

Greg Fitzgerald, Vistry

Greg Fitzgerald, chief executive of Vistry, gave a bullish outlook despite the tax break ending.

He said: “The group has had a very strong first half with a step up in completions, price increases, improved profitability and strong cash generation, all ahead of our expectations at the start of the year.

“Market trends remain positive and we are seeing good demand for completions beyond the end of the stamp duty holiday.”

He said the material supply troubles are expected to ease off towards the end of the year.

“There is some pressure across the material supply chain in terms of price increases and extended lead times, but we are working well with our partners to ensure successful delivery of our build programme and expect this position to ease through the second half,” he said.

In May, Vistry said annual underlying pre-tax profits will hit around £325 million, compared with previous estimates of £310 million for the year as buyer demand ramped up due to changing needs amid the pandemic and the stamp duty holiday.

But the full stamp duty break ended on June 30, with tapering relief due to finish on September 30.

Vistry said its forward sales had strengthened further to £2.7 billion, with 93% of 2021 housebuilding and partnership units secured – “significantly” ahead of the position in previous years.

Its average first half private market selling price stood at around £350,000, up from £332,000 a year ago.

The group completed 3,126 houses in the first half, up from 1,235 a year earlier, and is “firmly on track” to deliver around 6,500 over the full-year.