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When a UK stock has been absolutely hammered, it’s always worth checking to see if the market punishment has been overdone.
I’ve been watching housebuilder Vistry Group (LSE: VTY) with interest. Its shares have crashed 50% in the last year and are down 75% over five. Today, the price-to-earnings ratio is just 5.1. That looks incredibly cheap. But is it good value?
The UK housing market has endured a brutal few years. Interest rates soared after more than a decade of ultra-cheap money, mortgage rates followed, and property became even less affordable. The end of the Help to Buy in 2023 added to the squeeze.
UK house prices are still rising, but only slowly. The average price increased 2% in the year to June 2026, but new sales listings fell 6% year on year in July.
Why have Vistry shares done so badly
Yet some of Vistry’s problems are self-inflicted. The board pivoted to an ambitious strategy centered on building partnerships with local councils and housing associations. That approach backfired when partner-funded transactions were delayed.
At the start of 2026, Vistry had around £600m of unsold private homes. By June, it had cut that to less than £300m, but only after taking some painful measures. Average discounts on private homes jumped to 7.1%, from just 1.4% a year earlier.
Vistry expects to report a £30m loss before tax for the first half of 2026, down from an adjusted profit of £80.6m in the first half of 2025. Net debt stood at £470m at June. Dividends have been axed.
Could things get better?
Vistry is treating 2026 as a transition year. It’s cutting costs, reducing its landbank, shrinking work in progress and moving towards smaller, more affordable private homes.
It expects around £25m of overhead savings and is targeting net cash of more than £100m by the end of 2026. It also has a £3.9bn forward order book and was 80% forward sold for 2026 at the end of June.
That’s promising, but any recovery rests on forces beyond its control. If inflation and interest rates climb higher, it could stumble again. But if rates fall, investors may pounce on housebuilders. This is a cyclical sector. Better to buy when stocks are down than up. But investors need to be brave.
Vistry’s partnership model and focus on affordable housing could benefit from the government’s push to build more homes. It does add a layer of political risk though.
I’m staying cautious
The shares look dirt cheap but they could also get cheaper. Personally, I already have exposure to the housebuilding sector through Taylor Wimpey, which has had an equally torrid time. I’m not in the mood for more.
Vistry is worth considering for investors who think the housing market is close to turning. But they really have to know what you’re getting into. I can see a better UK stock buying opportunity today…
Should you invest £5,000 in Vistry Group Plc right now?
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Harvey Jones owns shares in Taylor Wimpey.
This story originally appeared on Motley Fool
