Monday, Jul 09, 2007
House builder gets pwned by rate rises
The Times: Bovis hit by stagnating house market
Bovis, the FTSE 250 builder, brought fresh misery to the housing market today as it reported that customer orders for its new-build homes have all but dried up and average sales prices have stagnated.
Average selling prices for a Bovis home rose by less than inflation to £189,000, only £300 higher than the £188,700 price at the halfway stage last year, the firm said.
Bovis's property market dampener followers a string of recent surveys, including from Halifax and Nationwide, highlighting that prices have come off the boil over the past three months.
Five successive interest rate rises since August have hit household budgets and made buyers more wary.
Bovis shares tumbled 8% on the news.
Posted by little professor @ 10:42 AM (208 views) Add Comment
18 Comments
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1. dohousescrashinthewoods said...
Busted ;)
2. Davros said...
What happened to the much quoted lack of supply of new homes? There's such a demand for housing, they only managed 2282 reservations in 6 months.
3. little professor said...
Pwned!!!
4. george monsoon said...
nice graph, whats the HTML to get this picture to display..
Cheers
5. talking rot said...
This is good news and bad news. The good news is that prices have stopped rising. The bad news is that House Building Companies are likely to stop building houses are so a position of voer supply is unlikely to be reached.
What am I missing?
6. confused76 said...
TR
There is a lot (A LOT) of second hand homes that are flooding the market as prices start falling.
Need for new house building is a urban legend. Far more residential capacity is added through house conversion, extensions etc every year.
Bovis et al will be pressurized to monetize the land banks when they realize that fall in house price is dragging land value down with it
7. confused76 said...
This is GRAND NEWS!
we should set up a stock price monitor on the home page with the stocks of:
- HBOS
- B&B
- Kensigton
- Bovis
- 2 more construction companies
we can also suggest to replace the static HPC chart... or make it smaller...
Webmaster, what do you think?
8. Andy said...
Talking Rot -
If house builders stop building houses to reduce over supply what do they do in the interim?
Its like OPEC switching off the valves from the middle east to control oil inflation.
They are in the business to build, they have two options - build slowly, to utilise the demand supply theory and sell fewer houses at (hopefully) inflated price or build quicker, and sell more houses at deflating price. As we are well aware that demand and supply is not the only factor in housing inflation they are like the rest of us in this economical cycle - between a rock and a hard place. I have a hunch, maybe a bit of a long bet but they'll choose the latter and speed up the cement mixer, otherwise its pick up tools and go home.
9. Pelethar said...
Brilliant, brilliant article. When people start referring to things like a "stagnant market" as an off the cuff remark when making a larger point, we really know we're in business.
10. millard said...
Confused76: have you seen this http://mortgageimplode.co.uk/graphs.php
11. little professor said...
George:
you type <img src="http://thewebsiteadress.com/image.jpg" >
12. george monsoon said...
13. little professor said...
">
George, you missed out the closing quotation mark. Also, you can't have a space in a web address - you need to replace it with % 20
<img src="http://www.tranceplant.co.uk/for%20sale.jpg">
14. Ihopeitgoeswithabang said...
There is a lack of housing. Affordable housing! ;-)
It is very true to say that extensions etc. do add alot more capacity.
Plus there is a whole generation of people now living with their parents etc.
They will just wait until they can afford to move out. As prices stall or dive more will wait until they have not only the money but the confidence that price drops are over.
The drop in share price reflects what will happen not just in the stock market but the open housing market when people realize they cant sell their house.
If you cant sell something you have to drop the price. Its as simple as that unless nobody ever moves of course.
Watch that share price over the next 6 months!
15. confused76 said...
Millard
Many thanks!!
Brilliant site
Webmaster, please please let s create a link from home page
http://mortgageimplode.co.uk/graphs.php
16. Talking Rot said...
Confused76 and Andy.
Thanks for your thoughts. I haven't seen a lot of second homes coming onto the market but there again, I haven't been looking. How do you know if a home is a second home or not? Having spent what was otherwise a slow afternoon, looking at Rightmove, I see there are a surprising number of homes offered as "No Onward Chain." Are these likely repossessions or is there a company which buys a home at a discount price and then flogs it on at a higher price?
Andy, I hope they keep the cement mixers turning - wouldn't like the idea of supply of houses drying up. Not at this critical time anyway!
17. paulos said...
Persimmon homes have also been hit today -was mentioned on Working Lunch.
http://uk.finance.yahoo.com/q/bc?s=PSN.L&t=1d&l=on&z=m&q=l&c=
18. Ash4781 said...
If the builders' stop building because they think a crash is coming where does this leave that new housebuilding programme ?
http://politics.guardian.co.uk/homeaffairs/story/0,,2121132,00.html