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Ash4781

Current Downturn Looks ``significantly'' Worse Than The 1990s

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http://www.bloomberg.com/apps/news?pid=206...mp;refer=europe

U.K. Homebuilders Face More Writedowns, Merrill Says (Update1)

By Tim Barwell

July 7 (Bloomberg) -- Taylor Wimpey Plc, the U.K. homebuilder that's booking $1.3 billion in writedowns, will need to book additional costs as a ``prolonged process'' of revaluing land sweeps through the industry, according to Merrill Lynch analyst Mark Hake.

Taylor Wimpey and Barratt Developments Plc, dubbed the ``distressed duo'' by Hake, are in talks with banks to ease borrowing terms and an agreement will ``eventually'' be struck, he said in a note today. The move will ``massively'' dilute net asset values on a per share basis, Hake wrote.

The two homebuilders have both slumped more than 90 percent in London trading in a year that Britain entered its most widespread housing decline for 30 years. Banks have reined in mortgage offers, starving potential homebuyers of funds and leading house prices to tumble the most since the end of the country's last recession in 1992.

Hake lowered his price targets on Taylor Wimpey, Barratt and six other rivals.

Barratt, the worst performing U.K. homebuilder this year, had its 12-month estimate slashed to 27 pence from 90 pence. It changed hands at 1,289 pence in February last year. The stock fell 4.1 percent to 40.5 pence in London today.

``We believe such a discount is supported by the greater financial constraints under which the group operates in terms of balance sheet gearing and interest cover,'' Hake and Judy Shaw said in the report. If the company fails to reduce its 1.7 billion pounds ($3.3 billion) of debt over the next 12 months, it may have to scale down operations, Hake said.

Worse Than the 1990s

House prices may drop as much as 17 percent by the end of next year, with a possibility that they may only return to 2003 levels by 2011, according to Merrill Lynch.

The current downturn looks ``significantly'' worse than the 1990s ``with house prices falling faster and further and very little recovery in real terms expected over 20 years,'' the analysts said.

Taylor Wimpey, which slid 14 percent to 27.25 pence today, had its target halved to 35 pence at Merrill. Redrow was lowered to 110 pence, from 170 pence, and Bellway was cut to 360 pence from 525 pence. All are rated ``underperform'' by Merrill.

Ouch what's the 20 year bit mean?

Edited by Ash4781

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"The current downturn looks ``significantly'' worse than the 1990s ``with house prices falling faster and further and very little recovery in real terms expected over 20 years,'' the analysts said."

Seems to be saying average values in real terms won't recover for 20 years from the bottom.

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Land is already down 30% from peak 18 months ago.

taylor wimpy had the balls to only lie somewhat, they said it is down 15%

while barrats whom are so ******ed cooked the books to suggest land is only down 2%

land with planning permission will be down 70% from peak in 2-3 years time. Falling some 20% a year!!!!

any builder with debt is going bust or becomes the banks bitch

any builder who bought land in the last 3 years and has a big stock of it is going to find it very hard out there for a decade!

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The current downturn looks ``significantly'' worse than the 1990s ``with house prices falling faster and further and very little recovery in real terms expected over 20 years,'' the analysts said.

Most of what they said was nothing new until... the 20 years thing. First time I recall anyone other than us talking about this. Very much like when analysts realised that dot.con shares would take 15 to 20 years just to get back to where they once were.

Edit:

Shouldn't be a surprise though - we are coming up to 20 years of the Japan's bubble bursting and they still ain't even begun to recover over there yet.

Edited by The Masked Tulip

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The current downturn looks ``significantly'' worse than the 1990s ``with house prices falling faster and further and very little recovery in real terms expected over 20 years,'' the analysts said.

I know we're all quoting the same section, but... oof, unless I've got the wrong end of the stick (and they're talking about builder's share prices), that's absolute dynamite. It really does make you wonder what the rest of the City have internally as predictions on this.

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So 20yrs before we get back to the highest point of the boom? surely anyone with a morgage might as well take their keys into the lender rent a house declare themselves bankrupt for 1 year and be all clear?

Maybe buy again at a far better price?

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So 20yrs before we get back to the highest point of the boom? surely anyone with a morgage might as well take their keys into the lender rent a house declare themselves bankrupt for 1 year and be all clear?

Maybe buy again at a far better price?

basically, yes.

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No more boom and bust - just bust.

It's all relative though. All it really means is that houses will no longer be seen as investment vehicles, so another use will have to be found for all that property. I suppose we could just live in them?

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Guest Bart of Darkness
so another use will have to be found for all that property. I suppose we could just live in them?

it's a wild idea but it just might work.

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It means I won't be buying until I'm retired. :blink:

Unlike you to miss the core truth Red. They are just extrapolating the last cycle.

20 years till you retire.

3 years till the bottom.

17 years of mortgage / cost free shelter before retiring with an assett as over valued as it was last year.

Sell up and buy a yacht.

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"The current downturn looks ``significantly'' worse than the 1990s ``with house prices falling faster and further and very little recovery in real terms expected over 20 years,'' the analysts said."

Seems to be saying average values in real terms won't recover for 20 years from the bottom.

And so, once again property will serve a useful purpose in providing shelter for human beings.

It just shows how predicable this all is.

How could people honestly believe Kirsty and Phil and all the other degenerates saying that property prices never drop in value............what never??? I blame the education system - or lack of it.

Edited by Wait & See

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Guest Mr Parry
Your forgot - endless bust :lol:

Minos,

Dangerous mindset to get into. Sure it maybe at least 6-7 years to the bottom, just don't miss it.

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Minos,

Dangerous mindset to get into. Sure it maybe at least 6-7 years to the bottom, just don't miss it.

rte-list.gif

Bust and Bottom.

Getting to sound interesting.

Has it got legs? Can One get Ahead? should one stick ones neck out?

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This cant be right because in 20 years time the average house will be 1 million pounds.

I read it some where.

I feel a cunning plan coming on. I will put my STR funds in a high interest savings account.

Kill an estate agent, get bagged up for 20 years rent free and 3 square meals a day.

Come out and buy a house outright. Retire. Seems like a win win situation.

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What sort of % drop do we need to get to the 2003 levels mentioned above ? Anyone know (or be bothered to find out ?)

I was bothered.

Approx nominal drop 32% drop from June 08 to Jan 03 prices.

Approx nominal drop 37% from Oct 07 peak to Jan 03 prices.

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  • 395 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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