Sunday, July 15, 2007

The market has given very clear indications

Not safe as houses & Northern Rock

Look one third down the article: "THE decade-long love affair with property is over. In the same way trees don’t grow to the skies, we are now being reminded of the investment limitations of commerical and residential property. The valuations of both asset classes have been pushed – for the time being at least – to the maximum. Property has enjoyed such stellar returns over the past five years that a lot of investors thought it was a one-way ticket to riches" "IT is not just property stocks that have taken a hammering. So too have banks exposed to mortgage lending. Their shares have been in sharp decline, none more so than Northern Rock, Britain’s eighth-biggest listed bank and fifth-largest mortgage provider."

Posted by confused76 @ 02:19 PM (479 views)
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2 thoughts on “The market has given very clear indications

  • planning4acrash says:

    “This is not to say that the sector is braced for a crash. What we have is a sector in transition”.

    “The share prices of the quoted majors such as Land Securities and British Land are now trading on discounts to net-asset value of 20%, a margin not seen for some years. This discount is a gentle warning that property is overpriced”.

    What a load of old twaddle, sounds like a lullaby to me! Slightly patronising.

    “That sort of confidence should not be ignored. It is based on the calculation that if you take British Land’s dividend of 2.7%, assume annual rental growth of 3% and take into account the benefits of the group’s high borrowings, shareholder returns could still approach 10% a year. It’s worth bearing in mind”.

    Assumption is the mother of all F*&k up’s! And the benefits of high borrowing in an environment of high interest rates? Rents up 3%, what about going down 3% in the event of a crash! Spare me the bull! In anycase, it will be the inexperienced investors who will really find a pinch. British Land survived the last crash, and I’m sure they will again, but, I wouldn’t assume a 10% return any time soon!

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  • Like in any industry, the amateurs will perish.

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