Housebuilder Vistry’s profits to smash expectations as sales surpass pre-Covid levels amid property boom
- Pre-tax profit for 2021 to be around £325m, up from previous guidance of £310m
- It expects to complete sales of 6,500 homes in 2021, up from 4,652 last year
- Group said it was on track to hit £1bn in sales in 2022
Housebuilder Vistry has said profits will come in well above expectations this year as it continues to see strong demand for homes and to benefit from rising house prices.
The group, formerly known as Bovis Homes, has seen house sales surpass pre-pandemic levels, with the average weekly private sales rate up 21 per cent so far this year compared to the same period in 2019.
And given the continued strong demand, it expects to complete the sale of 6,500 homes in 2021, more than it previously expected and up from 4,652 last year.
Housing boom: Vistry expects profits to smash expectations as demand remains strong
Like its peers, Vistry has benefited from the extension of the stamp duty holiday, a new mortgage guarantee scheme and the resulting increase in house prices, which have been rising steadily despite the Covid economic crisis.
House prices surged £20,000, or 8.6 per cent, on average over the past year, according to the latest available official figures.
Larger homes have become particularly in demand as Britons look for more space and options to work from home, with family homes having become like ‘gold dust’, according to Rightmove.
Vistry has also been a beneficiary of the Help to Buy scheme over the past years, and said it has seen ‘good demand’ so far for the revamped scheme, which is now available only to first-time buyers.
In light of the strong performance to date and with a forward book of £2.7billion, Vistry now expects pre-tax profit for 2021 to be around £325million, up from previous guidance of at least £310million.
Chief executive Greg Fitzgerald said: ‘It has been a very positive start to the year with strong demand across all areas of our business and our private sales rate increasing to 0.75.
‘As we approach the end of our first half, we anticipate results for the six months will be well ahead of our previous expectations.
‘Vistry housebuilding is firmly on track to deliver a significant step up in completions in FY21 and remains firmly focused on driving profitability to deliver the expected improvement in gross margin.’
The group, which has restarted dividend payments, expects to pay 20p per share with the half-year results and to adopt a progressive dividend policy that allowed it to move towards a 1.75 times dividend cover ‘over time’.
Shares in FTSE 250 listed Vistry rose 1.7 per cent to £13.18 in morning trading on Monday. They have bounced back to their pre-pandemic levels.
On the rise: Vistry shares have bounced back to their pre-pandemic levels
‘As we start to emerge out of lockdown Vistry Group has got a real spring in its step and is the first housebuilder to comment on expectations for FY2022 as well as FY 2021, suggesting that the vaccine rollout is boosting sales for the longer term and not just giving short term sales a shot in the arm,’ said Anthony Codling of property platform Twindig.
Like some of its peers, Vistry noted that the cost of building materials and labour are rising.
But the group also said that there were many opportunities to buy land at a decent price, especially larger sites, where there is lower competition.
So far, it has acquired over 1,350 plots across three developments and has a ‘strong pipeline’, it added.
Vistry was formed in January last year, after Bovis Homes merged with Linden Homes, which it had bought from Galliford Try alongside its Partnerships and Regeneration units for £1.1billion.