Friday, Feb 24, 2012
Plain speaking on pent-up demand
Telegraph: Redrow dismisses ‘lost decade’ housing claim
Steve Morgan, the chairman of housebuilder Redrow, says there is a “tidal wave” of first-time buyers trying to get into the housing market and dismissed City research questioning whether the UK has a housing shortgage as a “load of b*****ks”. In a note published on Wednesday, Collins Stewart analyst Alastair Stewart said the housing market could face a “lost decade” and that warnings the UK needs 240,000 new homes a year are based on “bunkum” projections. However, Mr Morgan said: “What is he smoking? It is a bit like saying it is not going to get dark tonight.” He said Redrow has had over 6,000 people inquire about the government's "NewBuy" mortgage indemnity scheme, which will encourage lenders to offer 95pc loan-to-value mortgages by underwriting potential losses.
7 Comments
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1. sibley's b'stard child said...
Redrow chairman in appeal to shareholder shocker.
To nick someone's post from the forum; 'well he would say that wouldn't he?'.
2. This comment has been removed as it was found to be in breach of our Blog Policies.
3. jack c said...
"Steve Morgan, the chairman of housebuilder Redrow, says there is a “tidal wave” of first-time buyers trying to get into the housing market" - I think "trying" might be the key word here, so lets have a look at the obstacles FTB's face (apart from high prices)
(1) Level of deposit required
(2) Lenders now carrying out stringent affordability checks (see Abbey posting earlier this week)
(3) Vendor gifted deposit pretty much outlawed
(4) Interest only lending restricted
(5) Fast track mortgages restricted (evidence of earnings and employment required)
(6) Income multiples reduced
(7) Other lending (cr cards/un-secured loans) factored into affordability calculation (Norther Rock ignored this for example)
(8) I'm bored now but I'm sure Mr Morgan will get my point which is more than his team will get at Newcastle today................
Mr Morgan, who also owns Wolverhampton Wanderers football club said "there is a “tidal wave” of high quality applicants tying to get into my office desperate to take the managers job following the sacking of Mick McCarthy" Source www.bbc.co.uk/sport/0/football/17152127
4. drewster said...
jack c,
You're quite right. There's a lot of pent-up demand for a house, just as there's a lot of pent-up demand for a Ferrari* - but only at the right price. Without loose lending, all that pent-up demand will go unfulfilled until prices fall. In fact our present situation of low transaction volumes is exactly what you'd expect.
(*Ferrari analogy stolen from John Stepek at MoneyWeek)
5. sibley's b'stard child said...
Quality candidates Jack ha, isn't Ian Holloway still out of work...
6. hpwatcher said...
You're quite right. There's a lot of pent-up demand for a house, just as there's a lot of pent-up demand for a Ferrari* - but only at the right price. Without loose lending, all that pent-up demand will go unfulfilled until prices fall. In fact our present situation of low transaction volumes is exactly what you'd expect.
people need somewhere to live, don't always need a car.
7. sibley's b'stard child said...
That's the great thing about analogies, they don't need to be taken literally.