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Shareholders Fear Housebuilders' Optimism Has Shaky Foundations

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Something doesn't feel right in the housebuilding sector. Shares are languishing despite a slew of upbeat statements from industry chiefs.

If the worst of the housing downturn is over, stock prices should be heading north as confidence returns – albeit slowly. In fact, market valuations have declined by 30% over the past three months. The City doesn't believe the recovery story being peddled by the housebuilding bosses.

Investors living in fear of a double-dip recession are alarmed at the continued unwillingness of the banks to dish out mortgages. The buy-to-let market has collapsed, and an acute shortage of rental properties is looming. And commentators say that by the end of 2011 house prices could fall by 10% from the mini-recovery seen mid-way through last year.

So why are the housebuilders upbeat? The answer is that companies such as Persimmon and Taylor Wimpey have fixed their balance sheets and are building more houses than at any time since the start of the credit crunch. Indebtedness has been reduced and several firms have raised funds from shareholders to bolster capital positions that were shot to pieces by the slump.

Full article at above link.

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...And commentators say that by the end of 2011 house prices could fall by 10% from the mini-recovery seen mid-way through last year.

10% from our bull trap peak by end 2011? Just about the most benign, conservative estimate you could wish for.

We're already half way there!

They'll be PRAYING for that small a drop.

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  • 441 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
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      • up 5%

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