Vistry warns profits will slump as Iran war hits housing demand

Vistry Group has warned profits will fall sharply in the first half of the year as the housebuilder battles weaker buyer demand triggered by economic uncertainty surrounding the Iran conflict.

The FTSE 250 builder said sales momentum had slowed in recent weeks as households grew more cautious amid rising living costs, higher mortgage rates and mounting fears over the economic fallout from turmoil in the Middle East.

The company revealed it is increasingly relying on discounts and buyer incentives to shift properties, particularly lower-margin homes and developments nearing completion, to accelerate cash generation.

Vistry cautioned that the strategy would significantly hit first-half earnings.

“Primarily due to the up-front profit impact of the actions to accelerate cash generation … we expect first-half profit to be significantly lower than the prior year,” the company said.

Although the group expects second-half profits to remain broadly flat year-on-year, it indicated that full-year underlying pre-tax profits are now likely to land around the middle of its guidance range, between £168m and £283m.

That would mark a notable decline from the £268.8m underlying profits reported in 2025.

The warning adds to growing evidence that Britain’s housing market is losing momentum as geopolitical tensions and stubborn inflation squeeze consumer confidence.

Figures released last week by Halifax showed annual house price growth slowed sharply in April to just 0.4pc, while prices fell 0.1pc during the month following another decline in March.

Vistry said open market sales remain around 30pc higher than a year ago overall, but admitted activity had softened as the economic backdrop deteriorated.

The builder also warned that construction costs were once again rising, with material inflation and labour pressures expected to intensify during the second half of the year.

The update comes during a period of transition for the company following the appointment of Adam Daniels as chief executive last month, replacing former executive chairman Greg Fitzgerald.

Daniels is currently conducting a wider strategic review of the business, with the findings due to be unveiled alongside interim results in September.

Despite the tougher market conditions, Vistry insisted it remained committed to its partnerships model, which focuses heavily on affordable housing and working alongside housing associations and local authorities.

“The board and our new chief executive, Adam Daniels, remain fully committed to the partnerships strategy and the key role our differentiated model can play in delivering the huge need for new housing across the country,” the group said.

The warning comes as Britain’s housing sector faces mounting pressure from elevated borrowing costs, fragile consumer confidence and fears that prolonged instability in energy markets could further weaken economic growth and household finances.