MARKET REPORT: Builder Vistry plunges as price points hit income

Housebuilders have been basking in a positive light since the Bank of England started cutting interest rates and the Labour government pledged to boost spending on housing.

However, conditions in the sector seem to be more uncertain for some, with a second profit warning in a month from blue-chip builder Vistry Group providing a salutary tale.

Last month, the developer shocked investors by revealing a black hole in its accounts related to over understated build costs at its South housebuilding division.

Vistry followed that up yesterday by revealing it expects the issues hit profits by £165m over the next few years.

That includes a £25m profit hit in the current financial year, which will also be impacted by reduced expectations for sale completions in the period. Vistry noted that its average weekly sales rate had jumped by 42 per cent to 1.02 for the year-to-date, up from 0.72 at the same stage last year.

Hit hard: Vistry said conditions in September and October were slower than anticipated, with buyers jittery ahead of the UK Budget

However, the firm said conditions in September and October were slower than anticipated, with buyers jittery ahead of the UK Budget.

The fresh batch of bad news saw Vistry shares plunge by 15.5 per cent, or 135.5p, to 738p.

After a busy time for corporate updates, interest rate decisions, and the US Presidential election results, the mood in the City was subdued at the end of the week. The FTSE 100 index closed down 0.8 per cent, or 68.35 points, to 8072.39, while the FTSE 250 index fell 0.6 per cent, or 117.45 points, to 20517.92.

Following a recent rally, blue-chip miners came under the cosh as copper and iron ore prices retreated after the latest attempts to prop up its struggling economy by top metals consumer China underwhelmed.

Among the heavyweight sector’s casualties, Antofagasta shed 6.6 per cent, or 119.5p, to 1689p, Rio Tinto lost 4.9 per cent, or 255p, to 4946p, and Glencore fell 5 per cent, or 20.6p, to 394.8p.

Scottish Mortgage Investment Trust slipped 0.6 per cent, or 5.2p, to 905.6p after announcing a change of chairman and revealing a half-year rise in net asset value (NAV) that fell short of its benchmarks.

But on the upside on the FTSE 100, pharma giant AstraZeneca gained 1.8 per cent, or 178p, to 9903p as it revealed positive high-level results from a phase III study of its Tezspire treatment for nasal polyps.

And automotive manufacturer TI Fluid Systems advanced 2.7 per cent, or 4.4p, to 169.4p after announcing that the deadline by which ABC Technologies must make a firm offer for the company has been extended to allow the group to finalise its remaining confirmatory due diligence and financing.

On the second line, High Street bakery chain Greggs fell 6 per cent, or 168p, to 2638p after analysts at Deutsche Bank cut their rating to ‘sell’ due to the Budget’s changes to company’s national insurance obligations.

The German bank’s analysts also reduced their stance on Mitchells & Butlers to hold for the same reason, with the pubs operator down 7.7 per cent, or 19.5p, to 233p.