British homebuilder Vistry warns of challenges after interim profit drop

(Reuters) - British homebuilder Vistry on Wednesday said economic uncertainties could continue to weigh on demand after its first-half profit dropped by a third, sending its shares down as much as 8.9%.

Persistent inflation has delayed interest rate cuts, leaving Britain's housing market under continued pressure from affordability concerns as buyers grapple with elevated borrowing costs and strained household budgets.

Vistry, which had a troubled 2024 with three profit warnings, on Wednesday reported a 33.2% drop in adjusted pre-tax profit for the first half of 2025.

While rivals like Taylor Wimpey,and Berkeley have all cautioned that market challenges are likely to persist throughout the year, Berkeley reaffirmed its forecast last Friday.

Vistry, which focuses on affordable housing, is counting on government housing support, including multi-billion-pound investments to boost supply, to help drive new contracts with affordable housing partners in the second half of 2025 and into 2026.

Still, optimism from increased state funding has been tempered by persistent inflation and concerns over potential tax hikes in Finance Minister Rachel Reeve's upcoming budget, unsettling the housing sector before the autumn selling season.

"We continue to believe that an investment in Vistry is a big call on the speed and scale of deployment of public sector funding, so far it has been a trickle rather than a torrent," said analysts at RBC Capital Markets.

Vistry said that partner funded and open market demand took a hit in the first half due to funding constraints and hesitation among first time buyers.

"There has been some variation in sales performance by region, with the London market continuing to be the most challenging geography" it said.

Shares of the company have lost more than half of their value over the last 12 months. They were down 4.4% at 577.4 pence as of 0822 GMT on Wednesday.

($1 = 0.7388 pounds)

(Reporting by Raechel Thankam Job in Bengaluru; Editing by Sumana Nandy, Rashmi Aich and Kim Coghill)