FTSE 250 house builder Vistry Group (LSE: VTY) has been under pressure in 2023. This is largely due to macroeconomic factors hindering the business. Are things looking up? And could buying some shares be a shrewd move for me right now? Let’s dig deeper.
Affordable housing
Vistry Group is one of the biggest house builders in the UK with a large profile and presence. It predominantly looks to offer affordable housing options to its consumers.
As I write, Vestry shares are trading for 784p. This is a 30% increase over a 12-month period as the shares were trading for 602p at this time last year. However, since September, they’ve fallen 17% from 946p in September to current levels.
Rising interest rates, increased mortgage rates, as well as soaring costs have hurt most of the main house builders across the FTSE.
Better 2024 on the cards?
The property market has been one of the biggest losers of macroeconomic volatility, if you ask me. Higher mortgage rates, falling property prices, and a lack of clarity as to what’s going to happen next has made it a miserable time for builders, buyers, and even sellers alike.
After many consecutive interest rate hikes, the latest decision to freeze rates has offered a glimmer of hope. Are we at the end of rate increases and could rates start to come down? Some analysts and market commentators think so, as do some mortgage companies, as they’ve been dropping their rates in the past few weeks.
Vistry Group could be in a much better position as 2024 rapidly approaches. As mortgage rates and inflation levels drop, consumers could find themselves in a better position to buy homes. Plus, the general market sentiment is positive as housing demand is outstripping supply. Longer term, this is good news for Vistry.
However, as the past 12 months or so have taught me, nothing is certain. Interest rates may yet go up again and there are other challenges for house builders to navigate too. For example, rising costs could take a bite out of Vistry’s profit margins. In addition to this, labour and material shortages could hurt operations and its performance too.
What I’m doing now
I must admit, at present, the investment case is decent for Vistry Group. The shares look good value for money on a price-to-earnings ratio of 10. Plus, a dividend yield of over 7% to boost my passive income is enticing. However, I do understand that dividends are never guaranteed.
Taking everything into account, I definitely think Vistry Group could see its shares and performance increase in 2024. This should be the case if macroeconomic issues subside or become more favourable at the very least.
However, with the current uncertainty and what’s been happening in recent months, I won’t be buying Vistry shares for my holdings just now. I will keep a close eye on developments though.
