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Vistry (LSE:VTY) is a name I’ve been focused on in my Stocks and Shares ISA recently. And I’m expecting to keep buying until the end of the year.
After falling 48% in a year, the stock looks cheap. But I think there are some strong reasons for thinking the company could do very well in 2026.
UK housing
The UK property market is in a difficult position at the moment. Despite mortgage rates being at their lowest levels in three years, the ratio of sales to inventory levels has been falling recently.
Source: JP Morgan Guide to the Markets Q4 2025
There’s an obvious reason for this. The Budget is coming up in November and there’s a lot of speculation about how the Chancellor is going to make ends meet.
The expectation is for tax increases of some sort, but there’s still a lot of uncertainty. And this understandably makes people cautious about taking out big loans to buy houses.
By 2026, however, things should be much clearer. So I’m hoping this will get the property market moving as it becomes easier for people to make buying decisions.
Profit warnings
An improving property market should help housebuilder stocks across the board next year. But there are also reasons for thinking Vistry is a particularly attractive candidate.
The firm has been dealing with some short-term issues that are entirely of its own making. Costing errors in one of its divisions meant a significant hit to profits in the company’s 2024 financial year.
Those are set to continue, but the effect should be much lower in 2025 and 2026. The cost in 2025 should be around £30m – down from £91m – and then £5m in 2026.
That’s why Vistry is the housebuilder I’m focusing on right now. I think the combination of margins expanding while revenues grow could be a powerful one for the business and the stock.
Risks
Rather than building houses to sell on the open market, Vistry focuses on partnering with housing associations and local authorities. I like this strategy, but it comes with its own risks.
The most obvious of these is it makes the company more reliant on public sector funding. While the government has been looking to support affordable housing projects, this can’t be guaranteed.
Selling properties to partners who buy in bulk can also create challenges when it comes to pricing power. And that’s a disadvantage of the guaranteed offtake that comes with Vistry’s model.
The positive, however, is that the firm has lower capital requirements than other builders. And I ultimately expect this to be an advantage when it comes to returning cash to shareholders.
I’m a buyer
Unlike other UK builders, Vistry doesn’t currently pay a dividend. In a stock market where shares in housebuilding companies come with high yields, this can mean it goes under the radar.
I think, however, that the stock is more attractive at the moment. In the near future, I expect lower costs and an improving property market to give the firm a big boost.
I also see the firm’s business model as a unique strength over the long term. That’s why I’m looking to keep adding to my investment, held in my Stocks and Shares ISA, before the end of the year.
