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chkee

Prediction: Builders Will Soon Flood Housing Market

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Since the start of the Credit Crunch in September 2007 the UK's residential property builders have continued to build - no option really as it's their only business revenue.

Staff were laid off, work purposefully slowed and completion dates on many new developments were put back in their anticipation of a quick recovery, this hasn't happened.

These projects are funded by massive borrowings and interest payments, the lack of income through completion of these developments is unsustainable and they will very soon have to bring these developments onto the market at heavily discounted prices, such as Galliard Homes so called half-price sale --- http://www.galliard-homes.co.uk/.

Great news for some?

FTB'ers - perhaps some prices will be low enough to attract them, especially if deposit incentives are included, but many of these developments were designed with the boom buyers in mind and will not be affordable for FTB'ers, even if heavily discounted = minimal impact

1RM'ers (1st Rung Movers, previous FTB'ers moving up) If, and only If prices are discounted enough and there is mortgage availability = minimal impact

EA's /Bulls - Increased market activity/interest will be (falsely) seen as recovery = false hope

Bears - Volume of discounted properties flooding the market will increase the current high property-to-buyer ratio further, resulting in further lowering of prices as everybody competes for the same few buyers. = HPC continues

Edited by chkee

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Since the start of the Credit Crunch in September 2007 the UK's residential property builders have continued to build - no option really as it's their only business revenue.

Staff were laid off, work purposefully slowed and completion dates on many new developments were put back in their anticipation of a quick recovery, this hasn't happened.

These projects are funded by massive borrowings and interest payments, the lack of income through completion of these developments is unsustainable and they will very soon have to bring these developments onto the market at heavily discounted prices, such as Galliard Homes so called half-price sale --- http://www.galliard-homes.co.uk/.

Great news for some?

FTB'ers - perhaps some prices will be low enough to attract them, especially if deposit incentives are included, but many of these developments were designed with the boom buyers in mind and will not be affordable for FTB'ers, even if heavily discounted = minimal impact

1RM'ers (1st Rung Movers, previous FTB'ers moving up) If, and only If prices are discounted enough and there is mortgage availability = minimal impact

EA's /Bulls - Increased market activity/interest will be (falsely) seen as recovery = false hope

Bears - Volume of discounted properties flooding the market will increase the current high property-to-buyer ratio further, resulting in further lowering of prices as everybody competes for the same few buyers. = HPC continues

I have just posted an article from today's Times on this very subject. Make sure you read it all, it ends with Taylor Wimpey operates from 337 outlets, having closed 49 since the end of the year, but the company is considering expansion. "If the current market stability is sustained into the autumn selling season we will look to increase the number of outlet openings during the second half of the year. While we remain cautious on land buying, opportunities are starting to emerge to purchase good-quality land at prices that should be value creating," it said.

http://www.timesonline.co.uk/tol/global/article6534703.ece

Edited by Tim Miller

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The builders have a window to recoup the absurd prices they paid for land.

If they don't do it some time the opportunity will be lost and they will be finished, they won't be able to service their loan books.

This fake recovery is an opportunity not to be missed.

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I have just posted an article from today's Times on this very subject. Make sure you read it all, it ends with Taylor Wimpey operates from 337 outlets, having closed 49 since the end of the year, but the company is considering expansion. "If the current market stability is sustained into the autumn selling season we will look to increase the number of outlet openings during the second half of the year. While we remain cautious on land buying, opportunities are starting to emerge to purchase good-quality land at prices that should be value creating," it said. http://www.timesonline.co.uk/tol/global/article6534703.ece

I was speaking to a representative of the Valuation Office the other week. He said selling prices for residential building land were down close to 50% from peak...

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I have just posted an article from today's Times on this very subject. Make sure you read it all, it ends with Taylor Wimpey operates from 337 outlets, having closed 49 since the end of the year, but the company is considering expansion.....

http://www.timesonline.co.uk/tol/global/article6534703.ece

Thanks. Interesting spin on 'expansion' by Taylor Wimpey - lets close 49 outlets and then say we are thinking of expanision, if we open just 1 we have expanded :lol:

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Prediction: Builders Will Soon Flood Housing Market,

The thought of all those builder's bums floating down the streets is not a pleasant one :(

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The thought of all those builder's bums floating down the streets is not a pleasant one :(

Whilst on the subject of builders, I'll never forget going out with Tracy from Manchester for a few weeks. A truly lovely 23 year old girl, with more than ample chest and wit. As we walked passed a building site a builder wolf whistled and shouted out "Hey, fancy coming over hear and sitting on my face" and as quick as a flash she replied "Why, is your nose bigger than your dick"? I just cracked up!

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The thought of all those builder's bums floating down the streets is not a pleasant one :(

The rest of us were just thinking of the fiscal effects, Laura.

Well done. ;)

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This is very interesting and I would tend to agree.

During the last crash I worked in new housing construction and it was the developers who instigated the crash by selling their stock at prices significantly lower than surrounding owner properties. They have to do this: Building and then selling properties is their business; they cannot wait round for the market to recover. The reserves to cover people's wages run out. The supply chain needs to run again there are hundreds of thousands of people's jobs inlvolved in construction in the UK. Its not only the apparent construction labourers who are affected - back office staff, logistics, anyone involved in the supply chain of materials, utilites, councils etc.

They sell off their existing stock and then start to build again so that they can re-employ their staff and get the cashflow moving.

Then all the stubborn sellers sit and watch and weep when they wish that they had accepted that 'rediculously low offer' 6 months ago.....

Get ready to grab a bargain new build.....

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Whilst on the subject of builders, I'll never forget going out with Tracy from Manchester for a few weeks. A truly lovely 23 year old girl, with more than ample chest and wit. As we walked passed a building site a builder wolf whistled and shouted out "Hey, fancy coming over hear and sitting on my face" and as quick as a flash she replied "Why, is your nose bigger than your dick"? I just cracked up!

The guy obvioulsy thought you were a plum then and just homed right into the missus? :lol:

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The guy obvioulsy thought you were a plum then and just homed right into the missus? :lol:

If it makes you happy!

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Taylor Wimpey said today that the bouyant state of the housing market means they could look forward to rising prices soon.

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