Vistry's first-half profit warning deepens concerns across a sector already battered by rising build costs and weakening confidence
Vistry Group has become the latest UK housebuilder to warn of a substantial hit to profits, citing the disruption caused by the US-Israeli war on Iran as buyer caution increases and construction costs rise.
The group said first-half profits would be "significantly" lower than the prior year — the most stark warning yet from a sector already reeling from the conflict's economic fallout.
Shares in Vistry fell 10.5% in early trading on Wednesday, reaching their lowest point in nearly 15 years. The update was issued ahead of the company's annual general meeting.
The group, which operates the Bovis Homes, Countryside and Linden Homes brands, said conditions had deteriorated since its last investor update in March. "The level of macroeconomic uncertainty has increased, and with it the range of potential outcomes for the current year," the company said.
Vistry shares plummet as housebuilder pauses buyback and warns on inflation https://t.co/fUI2UR9OQA
— City A.M. (@CityAM) May 13, 2026
Sales volumes remain ahead of last year, but buyer activity has softened in recent weeks, with the company attributing this to the Iran conflict. Build cost pressures on materials and labour have also emerged, and Vistry expects these to persist into the second half of 2026.
To offset the impact, the group is negotiating with suppliers and offering buyers larger incentives and discounts. It has also suspended its share buyback programme to focus on reducing debt.
"We expect [first-half] profit to be significantly lower than the prior year," Vistry said, forecasting a partial recovery in the second half. Full-year adjusted pre-tax profits are expected to land in the "middle of the range" of analyst forecasts, roughly flat with 2025.
New chief executive Adam Daniels has initiated a company-wide operational review, with findings due in September. Vistry issued three profit warnings in 2024 before reporting a 2% rise in adjusted pre-tax profit for the 2025 financial year.
Vistry is far from alone in feeling the strain. Rivals Taylor Wimpey and Bellway have both flagged risks from higher building costs and interest rate uncertainty squeezing affordability for buyers. Bellway cut its profit margin outlook after keeping incentives in place to attract buyers, while reiterating concerns about the potential impact of the Middle East conflict on affordability and build costs. Taylor Wimpey raised its build cost inflation expectations and retracted its operating profit guidance of £400 million for fiscal 2026, citing a "wide range of outcomes."
Berkeley Group, meanwhile, said that it can no longer achieve its required rate of return on new land purchases and signalled operating margins of 17.5% to 19.5% — below the 20%-plus it had previously achieved — as it seeks to absorb higher costs. Barratt Redrow maintained its guidance for 2% build cost inflation overall for fiscal 2026, but warned that higher energy costs are likely to be reflected in increased building material costs in the year from July 2026 to June 2027, and cut its land spending estimate as it becomes "even more selective" in an uncertain environment.
Crest Nicholson, which saw its shares slide by more than 40% after its own profit warning, is now forecasting net debt to climb as high as £120 million for the current financial year, while interest costs are expected to soar to £15 million — compared with pre-interest and tax earnings of just £5 million to £15 million.
The sector-wide pressure reflects a deteriorating operating environment. The US-Israeli strikes on Iran in late February triggered an immediate surge in oil and gas prices, which directly impacted energy-intensive UK manufacturers such as brick kilns, cement plants, and glass factories. Indirect consequences have since become more pronounced, with Chinese manufacturing costs rising sharply and UK importers facing increased costs due to supply chain disruption.
The Royal Institution of Chartered Surveyors' UK Construction Monitor for Q1 2026 recorded a headline workloads indicator of -12%, down from -6% in the previous quarter, as the war in Iran fuels uncertainty and continues to put pressure on material costs. Private housing fell to -19%. Profit margin expectations across the construction sector deteriorated sharply to -27%, reflecting concerns about inflation, financing conditions, and uncertainty linked to geopolitical tensions.
The broader mortgage market has also been affected. "The Middle East conflict has pushed mortgage rates higher, dampened buyer sentiment and fuelled speculation about how the government will respond to the resulting economic shock," said Tom Bill, head of UK residential research at Knight Frank, whose firm revised down its UK house price growth forecast for 2026 to 1.5%, from an earlier projection of 3%.
Separately, estate agent Savills indicated it is trading marginally ahead of expectations but warned that the conflict is dampening UK housing transactions. "Within our key UK market … we have seen greater caution among both buyers and sellers since the onset of the Middle East conflict," it said. The firm added that its Middle Eastern operations, which contribute around 5% of annual underlying profits, had "slowed materially" during the crisis.
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