Shares in Vistry jumped 15 per cent this morning after the housebuilder said it will now solely focus on building affordable homes.
The group announced this morning that profits before tax dipped by 8.4 per cent to £174.0m in the first half of the year, despite revenues growing 31.4 per cent to £1.77bn during the period.
But it warned that sales of private homes slowed again in June as high mortgage rates continued to erode demand for new homes.
As a result, the company said it would now focus on its partnership business – which works with the local government authorities to create affordable housing – and will stop building private homes.
“The scale of the social need for affordable mixed tenure housing across the country continues to increase and it is clear that Vistry is uniquely positioned as the leader in partnerships housing,” Greg Fitzgerald, chief executive of Vistry, said.
“The group’s operations will concentrate solely on partnerships by merging our housebuilding operations with our partnerships business, enabling sustained growth in housing output, providing greater benefits to our partners, and will deliver maximum value and long term returns for shareholders,“ he added.
Markets responded well to the firm’s new strategy.
“Affordable housing is much less sensitive to interest rates and the economic backdrop and this should give Vistry some solid foundations,” Russ Mould, investment director at AJ Bell, said.
“It says something stark about the state of the property market that Vistry is going to stop building private homes for the foreseeable future. By doing so it can take costs out of the business by scaling back its workforce and free up capital to such an extent that Vistry is able to commit to paying out £1 billion to shareholders over the next three years,” Mould added.