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Ash4781

Bovis Selling Land (builder Signals Trouble Ahead)

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http://www.bloomberg.com/apps/news?pid=206...EE&refer=uk

Bovis Profit Rises 3.4% After Accelerating Land Sales (Update3)

Sept. 10 (Bloomberg) -- Bovis Homes Group Plc, this year's worst-performing European homebuilding stock, said first-half profit rose 3.4 percent after it took advantage of soaring land values to sell some of its estate.

Revenue from land disposals helped Bovis counter a slowdown in the U.K.'s housing market. Higher interest rates have scared away home seekers, who are now taking longer to decide on purchases, Bovis said today. First-half volumes, reservations and prices were almost static after the Bank of England raised borrowing costs five times in the past 13 months.

``Downgrades are likely following the first-half figures, with the main culprit being volumes,'' said Alastair Stewart, an analyst at Dresdner Kleinwort in London.

After gaining for four straight years through 2006, Bovis shares have fallen 32 percent this year, making the company the worst-performing member of the Bloomberg Europe Home Builders Index of leading homebuilders stocks in the region.

Land sales generated 19.1 million pounds in revenue during the first half, almost double the year-earlier total.

Bovis is expecting an increase in unit sales of 10 percent in 2008. To help capture customers, a new range of incentives will be introduced to help counter the extra financial burden of higher borrowing costs. Those will include subsidized mortgages for the first three years and offering shared-ownership purchases.

Sorry for the cut and paste.

Builders giving a warning ?

Edited by Ash4781

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This is big news, large developers cherish their land banks and covet the land banks of their competitors, a large developer selling land to balance the books means the writing's on the wall. Its like Tesco selling supermarkets :o

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To help capture customers, a new range of incentives will be introduced to help counter the extra financial burden of higher borrowing costs. Those will include subsidized mortgages for the first three years and offering shared-ownership purchases.

Why not just drop the prices?

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"The group continues to anticipate an increase in volume ahead of that delivered in 2006," he added.

That prediction is in contrast to figures in Monday's Financial Times.

It says that housebuilders started work on 86,269 new homes in the first six months of this year, down 9% on the same period of 2006.

:lol: telling porkies. naughty piggy

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Builder selling their land bank its like a baker going into their store and flogging flour out the backdoor, must be getting grim.

Selling off the landbank is officially the end of the boom. The bust has started.

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Selling off the landbank is officially the end of the boom. The bust has started.

True. This is the news I have been waiting for.

HPC here we come!

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Guest KingCharles1st
Why not just drop the prices?

BLASPHEMER- STONE HIM STONE HIM!!!

Edited by KingCharles1st

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Guest Bart of Darkness
Why not just drop the prices?

Too sensible for the madness that the UK housing market has become.

Besides, prices only ever go up.

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Why not just drop the prices?

Because if the builder gives the buyer 20k to help them buy the property to all intents and purposes the price has not fallen but if they just cut the price by 20k instead then that price cut will register in the housing data and people will start to realise that prices are falling. They pulled this stunt during the 2004 - 2005 dip , if they hadnt then I expect the price falls would have been transparent and the market would have gone down a lot further possibly beyond teh point of rescue by Flash Gordon.

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profits are up though er..... through selling its land rather than its houses [core business]

the ceefax p201 headlines makes it sound good - but readers tend not to break the article down like you have done here.

"Local cobbler sells tools - Cobbler's profits up month-on-month"

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This is big news, large developers cherish their land banks and covet the land banks of their competitors, a large developer selling land to balance the books means the writing's on the wall. Its like Tesco selling supermarkets :o

Erm....they are!

http://thescotsman.scotsman.com/business.cfm?id=442822007

Looks like Tesco have called the top for UK property

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But for every seller there must be an anticipant buyer .

So who's buying the land ?

Depends on the price and how badly the vendor needs to sell, doesnt it?

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I am confused here. Who the hell is buying the land? If bovis don't think they can build on it and make money then why would anybody else want to take a chance?

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I am confused here. Who the hell is buying the land? If bovis don't think they can build on it and make money then why would anybody else want to take a chance?

If youre a builder with surplus cash then you buy up land for future years - builders can have land banks stretching back many years or it might be a builder with very little land bank who needs something to build even in a downturn.

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Who is buying the land? There are a lot of possibilities including

housing associations

well off people who now view land as an investment.

If this land has planning it could be sold to smaller developers.

It might even be possible to split it and sell it to self-builders.

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Some if the landbank will be very old and have a book value close to zero (if they haven't carried out any revaluations in the past). Therefore a relatively weak, BMV, private sale can deliver a big accounting profit and flatter the figures.

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Guest grumpy-old-man
I am confused here. Who the hell is buying the land? If bovis don't think they can build on it and make money then why would anybody else want to take a chance?

because for every person who thinks the crash is here, there will be 1000 that don't know. So they are selling to people who don't know imo.

They are selling because they know the value of that land wil drop in the coming years & it will boost there "profits" for the year.

That's why a lot of companies have been showning profits for 2007 imo, they have done so by downsizing, cutting operating costs & then that looks like a profit. :ph34r:

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