Monday, March 10, 2008

or… our profits are falling, please lower interest rates!

Bovis warns on market conditions

'Housebuilder Bovis Homes warned that it will sell significantly fewer houses in 2008 than in 2007, if current market conditions continue. And it called for "decisive action" to be taken now to reduce interest rates.' So, at the risk of fueling inflation Bovis is requesting the BOE to lower interest rates to protect their profits! What a sociopathic attitude, housebuilders have benefited hugely during the boom and now the gravy train is coming to an end they are now suggesting a lowering of interest rates to protect their greedy shareholders. Welcome to reality home builders, what goes around comes around........

Posted by loneranger @ 09:33 AM (1214 views)
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15 thoughts on “or… our profits are falling, please lower interest rates!

  • Landedgentry says:

    Why don’t they take ‘decisive action’ and lower prices??

    Makes you wonder, with all this cheap credit we had, did these guys also overleverage themselves that they have no choice but to sell their current properties at the full asking price?

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  • japanese uncle says:

    My interest income is falling, please raise base rate to 7.0% for Christ’s sake!

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  • My interest income is falling, please raise base rate to 7.0% for Christ’s sake!

    I think interest rates should go up to 14% at least, just like in the good ‘ol days!

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  • it_is_going_with_a_bang says:

    Here’s a new idea.

    Instead of relying on interest rate cuts which affect the whole economy of the country how about just reducing the price of your overpriced new houses?

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  • How dare they? The company profits are supposed to be paid to shareholders. These guys take their juicy cuts as salary(+ expense) which is not affected by a little drop in profit. Shareholders are getting hit. Shareholders are used as soldiers.Do they have the respect they deserve nowadays?. Since labour has been in power, FTSE has not budged. Alternative is that pound will drop in value

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  • My father is a builder and he reckons the cost of the raw materials haven’t gone up too much over the last 10 years (2-3%/yr) and definitely at a much reduced rate compared to the total cost of a new house on land. Land has increased in value too but these big b*stard companies lock away most of the land in their “Land banks” and release at their leisure, so they don’t pay much more for the land either as it is all in bulk.

    Right so that means that they are pocketing the increased value on the house/land package as pure profit.

    Why does the BBC continue supporting such drivel essentially using taxpayers money to support private businesses and give them a public soapbox, it must be illegal.

    Notice how the BBC do not offer a comments box as much as they used too on their articles…so you cannot voice your opinion and where are the stories on the countless FTBers priced out of their local market? Or those who just refuse to buy such as I?

    On a lighter note check the “see also” story on the right from the 10th Sep 2007 titles “Bovis predicts rising home sales” hehehehehe. ooooops got that wrong then!!!

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  • @ geed – they probably predicted rising sales to paint a rosy picture in their annual report. Now that’s out of the way, they are predicting falling sales.

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  • japanese uncle says:

    BBC should concentrate on the types of programmes such as David Attenborough, which can be universally appreciated as enlightening entertainment and news (although I no longer trust the contents), and stop wasting our money for J.Ross involving multi-million salary or garbage promoting property-financial gambles, thereby reducing the TV license fee. BBC directors and governors salary also must be reduced by 30%. BBC do not need to comete with private TV companies at all.

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  • At least they have managed to reduce their share price by 9% (10.45am)

    The shares are £5.24 down from a 12 month high of £12.04, that’s a 56% decrease.

    http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/shares/3/23247/default.stm

    I bet the share options for the directors are looking a little sad, still it serves the rotten leaches right!!

    I really do lay a high proportion of the blame over where we are on the building industry (or the non regulation of it)

    If they had built houses rather than city centre flats
    If they built property that has a life expectancy of more than 50 years
    If they built houses WITH gardens
    If others were allowed to buy land to build on (self builders)

    Then maybe I would have some sympathy, but I don’t!!!

    Rant finished.

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  • European-bear says:

    Tax undeveloped land. Then the builders would be encouraged to either sell it or develop it, rather than hording it until the next boom.

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  • wdbeast said…

    “If others were allowed to buy land to build on (self builders)”

    Absolutely, could not agree with you more, wise words indeed.

    Look at Canada and even more so Australia. The quality and diversity of homes in these countries make the UK equivalents look like institutions for the criminally insane. New builds are pig ugly clones of one another, if I lived in one I would struggle to remember which was mine after a few jars on a Saturday night, I would probably have to try 6 different front doors before working out which was mine! ugly ugly ugly!!!

    New houses in Australia all look different, a street of 30 properties may not have one home that is the same and often these houses are built by owner builder ensuring a diverse flavour. Land (developed and serviced sub-divided, ready to build blocks) is released to the buying public rather that the dodgy backhand behind closed door deals that must go on between local councils and these big fat building companies to secure prime land. People build houses they want (subject to planning of course) rather than the cheap mass produced sh!te we are told we want to buy. Building land for private individuals is only available in the UK to the “Grand Design” fraternity who are usually flush with cash….such a shame as we could have much more vibrant communities that are actually aesthetically appealing.

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  • crash bandicoot says:

    “First-time buyers… are buying properties as a home, not as an investment.”

    You can tell how mixed up the whole system is when somebody feels the need to utter the above sentence. The good news for Bovis is that they have analysed the situation and now realise where the market is going. Now all they have to do is adjust their output to reflect the change in the market and they might start selling some houses again. The days of mug “investors” buying off-plan at inflated prices with deluded ideas of rental coverage are over.

    In the long run home builders will drive prices down because they are less able to sit back and wait to sell houses, unlike private sellers who will keep their overvalued house on the market for years. I bought my first house from a builder in 1993 and it was about 25% less than similar houses that were up for re-sale. House builders need to be house sellers too.

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  • @European Bear….. I agree with you 100%. Land with planning permission should be taxed at a rate which effectively forces it to be developed. This would prevent much hoarding behaviour. An even better strategy would be a full Land Value Tax applicable to all land – this would discourage speculation and encourage the proper use of land.

    @geed….. Some of the best buildings in the world consists of “clone” houses – take a look at Bath’s Royal Crescent, generally considered one of the finest examples of Georgian architecture. After a few pints you’d certainly struggle to recognise yours, that’s why they have numbers. In some cities a free-for-all situation has worked too – Amsterdam would be a shining example. I don’t know about Australia, but in North America you find the same problems of uninspiring architecture in new-builds. Ultimately we need to find the right economic incentives to build decent attractive spacious homes, whether built by large developers or small builders. Right now in the UK it’s too profitable to build pokey houses and flats.
    Royal Crescent, Bath | Prinsengracht, Amsterdam | Unknown street, Canada (probably Edmonton)
    Royal Crescent, Bath / Prinsengracht, Amsterdam / Unknown street, Canada

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  • I’ll get back to you drewster, but you’re not comparing apples with apples really are you.

    You’re comparing a new build american $150,000USD home with a circa 100yr old? £500,000+? property in bath. C’mon play fair.

    I admit though the picture you provided for the american example is woeful.

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  • geed is right about building costs. The rebuild costs for houses, upon which insurance is based, generally go up in line with RPI. 10 years ago the rebuild cost for any house would have been about 90% of its market value, now that figure is closer to 50% (it may even be less) as the bubble value has diverged from the real value.

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