Sunday, Sep 05, 2010
Housebuilders continue to screw everyone, whilst pulling the wool over their own eyes!
Guardian: Shareholders fear housebuilders' optimism has shaky foundations
David Ritchie, chief executive of Bovis Homes, says: "I don't think a double dip is on the cards. We could flatline for a bit, but that doesn't worry us because we are operating from a position of strength."
Housebuilders have cleared unsold stock, acquired land at rock-bottom prices and cut costs to take account of lower demand. And land acquired at inflated prices has been written down to reflect new economic realities. Even if house prices fall by 5%-8% in the next year, the big players should be able to maintain margins.
[Persimmon] Chief Mike Farley says: "Build costs are firmly under control at the lower prices we have negotiated over the past 24 months. These lower input costs are helping us to rebuild and sustain higher margins."
Posted by markj69 str05 @ 09:16 PM (714 views) Add Comment
4 Comments
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1. markj69 str05 said...
Not bad eh? 'Operating from a position of strength', 'acquiring land at rock-bottom prices', and' build costs... at lower prices'. It's no wonder they're 'sustaining higher margins'. Well if they've not factored in a continued slow down (Double dip), at least they have scope to ride the bad times, IE. Reduce margins by lowering prices! Now there's a novel idea!
2. icarus said...
Who says the land acquired was at 'rock-bottom prices' if house prices do indeed fall 5-8% in the coming year?
3. markj69 str05 said...
'Who says the land acquired was at 'rock-bottom prices'... Who knows? Who care? - Only the shareholders. Sound like a bit of smooth talking to appease the shareholders - Maybe ahead of another request for capital?
And 5-8% sounds optimistic (From a bulls perspective - not mine). 2008 realises about -18.5% (Halifax Dec yoy - £197K to £160K). It wouldn't surprise me if we had similar through 2011.
Expect more of the same for some time still - QE and low IR's.
4. Crunchy said...
Land banking?