Thursday, July 10, 2008

Are savvy investors considering buying back into builders

Britain's Homebuilders Get Bloodied

Housebuilders are without question being absolutely thumped in the markets and rightly so considering they did not contemplate the possibility and consequence of falling house prices. BusinessWeek consider that long-term investors may consider the shares may soon be buys. Personally I believe the fallout from builders will see the demise of some big names and the ones that do survive are at least 12-18 months off being worth buying. Builders shares anyone?

Posted by denzil @ 10:21 AM (667 views)
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5 thoughts on “Are savvy investors considering buying back into builders

  • mark wadsworth says:

    More desperate ramping.

    Per the FT recently (article already posted here, somewhere):

    Merrill Lynch says a 20 per cent-plus decline in house prices over 12 months “has the potential to eliminate all of a housebuilder’s net asset base”

    So the answer is “no”, I guess.

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  • Spot on Mark

    House price falls have just started and look at the mess builders are in.

    I posted this the other day.

    I don’t know what builders have been paying for their land banks but in other stable countries (Germany) they don’t put anything like the value on land that we do.

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  • The trouble with the major housebuilders is that they are heavily in debt. When a company falls apart it’s the banks and bond-holders who get first dibs on assets. Shareholders only get the scraps. So if the housebuilders hadn’t leveraged themselves to the hilt (like everyone else in the UK…), there would still be plenty of value in there.

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  • mark wadsworth says:

    Str2007, sweet! And, ask yourself, why should a couple of hundred square yard patch of earth be worth any more than €5,500? (yes there are reasons!)

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  • str
    there is just one problem with east germany that’s high unemployment
    south germany around munich is a much better bet about 20% more but worth it
    better employment prospects and higher wages

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