Jump to content
House Price Crash Forum

Builders Share Prices Recovering


Recommended Posts

Have been monitoring builders' share prices for years now and they're on a big uptrend - especially surprised to see BDEV rising to near 150p. They always say strong builders shares means a stronger housing market. I think it's over.

Your post on a 158p price target back in November.

Panmure now have a target of 158p for BDEV, especially since it is operating in a 'stable housing market'. Never heard such tosh in all my life.

http://www.housepric...howtopic=171813

It has doubled since the August lows.

Edited by Red Knight
Link to post
Share on other sites

What puzzles looking at bdev share price is what has changed since last August?

A comparison to last year shows there may be some seasonality but the increase in share price is still a surprise to me as in Bath the prices had then just started to slide, and have continued to do so since then.

Numbers coming to market very few for past few weeks and main trend recetly has been a fresh flush of SSTC returning to available.

Link to post
Share on other sites

http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/9098319/Bumper-profits-from-UK-house-builders.html

The Telegraph has that for the companies mentioned it's a margin improvement due to land bought when the prices collapsed. That doesn't sound all that sustainable to me.

Interesting article.

On reading this section...

"The scheme, designed just for new builds, would allow potential home owners to buy 95pc of the value of the property, with the government underwriting some of the risk.

Mr Clare said: "We are seeing an enormous amount of interest in this, with 1,000 people registering each week on our website. We believe it should be flexible and provide the necessary kick start to the market which has been more or less starved of mortgage finance in the last four years." ...

..it looks like many are looking to buy new because they will be able to borrow 95%, so as we anticpated here, this government scheme is set in place to help the builders.

.

However surely this also means it is going to prove more difficult for those looking to sell non new build homes, so they will have to price competitive in order to sell?

Link to post
Share on other sites

What puzzles looking at bdev share price is what has changed since last August?

A comparison to last year shows there may be some seasonality but the increase in share price is still a surprise to me as in Bath the prices had then just started to slide, and have continued to do so since then.

Numbers coming to market very few for past few weeks and main trend recetly has been a fresh flush of SSTC returning to available.

Persimmon is getting back towards levels last seen pre crash- I'm amazed by this too. My understanding is that when there is an expectation of rising house prices, builders rise because there is an expectation of rising profit margin. And a 10% or 20% rise can double margin & hence earnings. In the same way that the price of mining companies is to some extent a leveraged play on commodities.

Link to post
Share on other sites

Interesting article.

On reading this section...

"The scheme, designed just for new builds, would allow potential home owners to buy 95pc of the value of the property, with the government underwriting some of the risk.

Mr Clare said: "We are seeing an enormous amount of interest in this, with 1,000 people registering each week on our website. We believe it should be flexible and provide the necessary kick start to the market which has been more or less starved of mortgage finance in the last four years." ...

..it looks like many are looking to buy new because they will be able to borrow 95%, so as we anticpated here, this government scheme is set in place to help the builders.

.

However surely this also means it is going to prove more difficult for those looking to sell non new build homes, so they will have to price competitive in order to sell?

Whats that noise...??

Ahh yes, its the sound of front bench MPs spouses rubbing their hands together as the share price rises.

Bent as ******.

The whole thing.

Link to post
Share on other sites

What puzzles looking at bdev share price is what has changed since last August?

A comparison to last year shows there may be some seasonality but the increase in share price is still a surprise to me as in Bath the prices had then just started to slide, and have continued to do so since then.

Numbers coming to market very few for past few weeks and main trend recetly has been a fresh flush of SSTC returning to available.

My pension funds have all leapt up..

QE of course around the World is funding what else?...not lending, so they are buying shares.

Link to post
Share on other sites

I've given up expecting a significant crash in nominal house prices, but I don't believe they're about to move significantly up either.

I think we'll see UK house prices drift sideways for the next decade. Slightly down one year, maybe slightly up the next. But instead of a short sharp cathartic crash, we'll have years and years of inflation and domestic debt paydown to take the heat out of the 13 year property bubble that ran from 1995 to 2007.

Ultra low interest rates and QE has prevented the crash for the last few years, and they'll continue to prevent it for the next ten. But restricted mortgage availability, low pay rises, and job insecurity will equally prevent any return to significant price increases.

Link to post
Share on other sites

I've given up expecting a significant crash in nominal house prices, but I don't believe they're about to move significantly up either.

I think we'll see UK house prices drift sideways for the next decade. Slightly down one year, maybe slightly up the next. But instead of a short sharp cathartic crash, we'll have years and years of inflation and domestic debt paydown to take the heat out of the 13 year property bubble that ran from 1995 to 2007.

Ultra low interest rates and QE has prevented the crash for the last few years, and they'll continue to prevent it for the next ten. But restricted mortgage availability, low pay rises, and job insecurity will equally prevent any return to significant price increases.

That was my view when I bought last year. The only difference is that an macro financial shock could end those low interest rates.

Link to post
Share on other sites

That was my view when I bought last year. The only difference is that an macro financial shock could end those low interest rates.

Yup, and a decade is a very long time for nothing to happen. There are some very big question marks left hanging. The euro may not have a future, even in the short-term. China looks to be slowing. God knows what geopolitical events are in the pipeline. Heavy downside risk. I'm staying well away.

Link to post
Share on other sites

Persimmon is getting back towards levels last seen pre crash- I'm amazed by this too. My understanding is that when there is an expectation of rising house prices, builders rise because there is an expectation of rising profit margin. And a 10% or 20% rise can double margin & hence earnings. In the same way that the price of mining companies is to some extent a leveraged play on commodities.

I have a few shares in PSN as a hedge, it has recovered a lot, but it is still worth less than half of it's 2007 valuation (1500 => 621).

My guess is that the price no longer reflects armageddon.. not sure it means the housing market is definitely about to pick up any time soon. As others have mentioned, builders have been getting quite a bung from government.

Link to post
Share on other sites

I've given up expecting a significant crash in nominal house prices, but I don't believe they're about to move significantly up either.

I think we'll see UK house prices drift sideways for the next decade. Slightly down one year, maybe slightly up the next. But instead of a short sharp cathartic crash, we'll have years and years of inflation and domestic debt paydown to take the heat out of the 13 year property bubble that ran from 1995 to 2007.

Ultra low interest rates and QE has prevented the crash for the last few years, and they'll continue to prevent it for the next ten. But restricted mortgage availability, low pay rises, and job insecurity will equally prevent any return to significant price increases.

They will raise interest rates while doing QE but the minute they stop QE then interest rates must rise to meet real demand. Surely the UK's position will come under the spotlight and QE stopped before another ten years are up? We are up to £325bn already. If you say they will get away with £500bn that's only another 3.5 shots of £50bn a time. Sir Mervyn wants to stagger it a bit until he escapes in 2013 then when reality bites it will be on someone else's watch.

Link to post
Share on other sites

Have been monitoring builders' share prices for years now and they're on a big uptrend - especially surprised to see BDEV rising to near 150p. They always say strong builders shares means a stronger housing market. I think it's over.

I own a widget factory. Through subsidisation, the government have just increased tripled the number of people who want and can afford widgets. Do my shares: a ) Fall or b ) Rise?

However surely this also means it is going to prove more difficult for those looking to sell non new build homes, so they will have to price competitive in order to sell?

Exactamundo!!

Link to post
Share on other sites

However surely this also means it is going to prove more difficult for those looking to sell non new build homes, so they will have to price competitive in order to sell?

Agreed. If you have 10k for deposit and want to buy, you could only get a house for £100k which means nothing for most, but under government scheme, you could get a £200k house, which may be a small 2 bed New build. So no it is popular with the masses.

Trouble is, like all there schemes a few years down the line, and there buyers are in trouble. As we all know, throw extra mortgage money at a market and prices will rise, therefore the disconnect between New and old properties will grow even more, so when they come to sell, they will find that they can't get anywhere near as much for it as whew paid. But with only a 5% equity to start with there are going to be a lot of negative equity about.

I am not fully familiar with the government infinity scheme, but usually the insurance covers the bank and not the mortgagee. So either many people will still find themselves in trouble or if the government really is covering the risk themselves, them even more losses for the public purse. Either way it is another mis selling scandal in the making.

When will we ever learn!

Link to post
Share on other sites

Some of the builder shares are breaking out (BDEV, PSN, TW, BWY), but not on massive volume. This is key.

Something is brewing, but more likely I think it is a false breakout. If the rise continues, it would filter down to the smaller ones like RDW, QED, etc, and I would invest in the smaller to mid tiers.

Edited by MrTReturns
Link to post
Share on other sites
  • 3 years later...

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.