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Shares in FTSE 250 housebuilder Vistry (LSE:VTY) fell 8% on Wednesday (14 January) after the firm’s latest update. I can see why, but I’m still optimistic about this one.
Recent trading has been disappointing, but the company’s long-term competitive position is still intact. So I took the opportunity to add to my investment.
What’s going on?
At first sight, Vistry’s results for the 12 months leading up to 31 December 2025 look pretty uninspiring. But beneath the surface, I think there are reasons to be positive.
The company recorded £4.2bn in revenues, which was largely in line with the previous year. And a 2% increase in pre-tax profits isn’t really anything for investors to get excited about.
The big issue is that Vistry managed to sell fewer properties. The number of units sold fell 9% with open market sales down 11% and partner-funded units down 11%.
While the firm began to move past its accounting difficulties in 2025, it wasn’t a particularly strong year operationally. And that’s why the stock initially fell 8% on Wednesday morning.
Reasons for optimism
The headline numbers weren’t strong, but there were some encouraging signs. The most obvious is that affordable homes completions were up 30% during the second half of the year.
That’s a clear sign that things are moving in the right direction. And the firm’s partnership model helped limit the effects of inflation, which is a key risk for housebuilders.
This didn’t result in higher overall sales, because a number of the company’s partners paused deliveries in order to refinance. That’s a reminder of the risks of Vistry’s partnership model.
Based on what the firm has said, though, these revenues should show up in the next 12 months. And there’s something else investors need to look at for this year as well.
Affordable homes
The UK is about to set out on a £39bn initiative called the Social and Affordable Housing Programme (SAHP) backed by the government. This is set to run between 2026 and 2036.
Local authorities, housing associations, and other providers are set to apply for subsidies to allow them to build affordable homes. And they’ll need partners to help them achieve this.
Vistry is already a leader in this space, having shifted its focus from building for the open market to partnerships some time ago. So I think they stand to benefit in a big way.
SAHP proposals are expected to be submitted in the next six months or so. And for a company with a market value of £2bn, the potential opportunity could be huge.
Why I’m buying
I think Vistry’s latest results highlight an important point about the housebuilding industry. There are reasons to be optimistic over the long term, but the near future is hard to predict.
Short-term disruptions in the housing market or with partner funding can create volatility in any given period. But the long-term picture hasn’t really changed.
The UK still has a huge shortage of housing and a strategy for addressing this that I think should benefit Vistry in a big way. That’s why I bought the stock on Wednesday when it fell.
