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Countrywide Plc, the UK's largest estate agency chain has delivered another profit warning and its shares have plunged 14% or more. Profit will be 'significantly below' analyst estimates.

In my opinion this is one of the leading indicators of the forthcoming crash. As a listed company, they have little choice but to report the truth. No vested interests or Wrigglesworth mumbo-jumbo allowed.

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I think a lot of this comes about because no-one knows what the real value of a house is. How much is a house worth? Not "a house is only worth what someone is willing to pay for it", because by that rationale houses would only be worth 2p. A house is worth the maximum amount that one out of all interested buyers of that house are prepared to spend.

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When looking at the the UK housing market, the value of a house is what someone is willing to pay for it, but only if that someone can afford to pay that price or raise the finance to pay it.

i think "value" has been irrelevant in the UK market for the past few years. people have allowed themselves to be stretched as far as possible to buy. fortunately, peoples attitudes seem to have been changing in the last few months.

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When looking at the the UK housing market, the value of a house is what someone is willing to pay for it, but only if that someone can afford to pay that price or raise the finance to pay it.

Agreed. It's not simply a matter of supply and demand, it's a matter of financing. That's why I don't blame the agents such as Countrywide for causing the boom, I blame the lenders.

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No, it's not what "someone" is willing to pay for it; if that were the case, the house over the road from me is worth 2p, because that's all I'M willing to pay for it.

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If that's the maximum you were willing to pay for it, and you were the ONLY person willing to pay anything for it, then yes that is how much it is worth becuase if you try to sell it that would be the most money it could be sold for.

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If the building is only worth £50K, why do I have to insure for a rebuild cost of £150K?

It is a modest Edwardian terrace in SW London, so no fancy stonework or anything, but the surveyor said rebuild cost was £150K so that's what I'm forced to pay the insurers for.

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Terrace's and semis cost a lot to ensure as propping up your neighbours if the worst happens is your responsibility and its expensive.

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If the building is only worth £50K, why do I have to insure for a rebuild cost of £150K?

It is a modest Edwardian terrace in SW London, so no fancy stonework or anything, but the surveyor said rebuild cost was £150K so that's what I'm forced to pay the insurers for.

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I think this has something to do with the fact that 'tradesmen' in the construction industry expect to earn anywhere between £600 and £2000 a week. It does not take many man weeks of that sort of money to mean it costs 150k to rebuild your house.

In the last crash - on average tradesmen's wages halved in a matter of months. Bricklayers went from £80 a day (1989) to £45 a day (1990) almost overnight. Lots of people left the industry disillusioned with having so much work they could not believe their luck one minute to being out of work with no prospects the next. So, if you are planning to have an extension built - hang on - you'll get it half price in a couple of years.

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If the building is only worth £50K, why do I have to insure for a rebuild cost of £150K?

It is a modest Edwardian terrace in SW London, so no fancy stonework or anything, but the surveyor said rebuild cost was £150K so that's what I'm forced to pay the insurers for.

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The rebuild cost is 150k because

1. 50k based on new build, economies of scale, think of the logistics of demolition and rebuilding, nightmare.

2. Work will have to be carried out by polish, czech and curdish labourers who will be flogging 30% of materials to their mates on other jobs.

3. Its in London.

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Definition of market value required for secured lending: The estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

(This obviously excludes 'special purchasers' for whom the asset has a higher value because of personal circumstances.)

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There is an old saying that profit warnings come in three's. I believe this CWD's second. The third will have them written off as a basket case as shareholders scramble to dump at any price.

And the person who said that CWD have to play it straight and "tell it how it is" was spot on. Being a quoted company, you have to give accurate business assessments even when you know that it's going hurt your shareprice.

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"have to", but they certainly don't.. They hold on as long as they can, in the case of most house-builders/estate agents, because they are still trying to affect sentiment. It's only when it becomes impossible to hold on to the lie any longer that the truth, or some of it, starts flowing out.

lucky

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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% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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