Sunday, July 6, 2008

Housebuilders at risk of collapse

Homebuilders face disastrous £3bn landslide

Britain's housebuilders will see at least £3bn wiped off the value of their land assets as a further 1,300 jobs in the sector go this week. The slump will create new demands from banks for housebuilders to shore up their devastated balance sheets with fresh capital.

Posted by mken @ 01:22 PM (1221 views)
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8 thoughts on “Housebuilders at risk of collapse

  • whiteknight says:

    They will of course be treated as generously by the banks as the banks were by the Treasury who did not make them pay upfront money into a deposit insurance scheme. The only thing that made any sense was an insistence on upfront payment.

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  • why should the tax payer inject money to be screwed with high prices then higher taxes down the line

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  • This was the chairman’s statement for 2007 full year results

    Persimmon has once again delivered
    an excellent result during what has
    been a very challenging year.The results
    we announce today show a further
    improvement over the record results
    of the previous year.

    Pre-tax profits for the year ended 31 December 2007 were £585.1m
    (2006: £582.1m).

    John White Group Chairman
    25 February 2008

    Can you imagine what this years results will look like, assuming they are still in business.

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  • If the banks refuse to allow these housebuilders to reschedule their debts, the risk is that these companies will go bust and none of their debt will ever be repaid. The banks will then have to write off those losses from their balance sheet already weakened by their inconsiderate lending.It will lead to a more fragile banking sector, thus deepening the recession.
    The banks are the pilars of the economy and should act responsibly giving some support to their debtors, instead of running away from their responsabilities. Unless banks sort the mess they created, it is unlikely shareholders will inject new money themselves.The banks have more to loose than the shareholders and they know it. They will negociate with these indebted companies in order to reschedule their debt.

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  • All I want is a decent plot of land to build a modest house on. I’m happy to buy the land off them.

    A friend once observed that house builders build profits not homes. They grab all the land and sit on it while building a handful of substandard “instant slum” houses and make obscene profits.

    When prices collapse they expect the tax payer to bail them out.. You can’t privatise profits and nationalise losses, if you want your bonuses and dividends then you have to accept that sometime it all goes wrong and you go to the wall! To be honest if a big building company did go under how many people would actually lose their job?, isn’t the whole industry made up of contractors, there are virtually no real employees of a firm like Barrat?

    If one or two were to go bust, someone would buy the carcass and possibly offload some of their now worthless plots. As long as there is a plot near me I’d be happy…

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  • it_is_going_with_a_bang says:

    “Measures to underpin the market include cash to buy land off distressed builders”

    You have to be kidding me? The land should be bought at the knock down price it deserves to be at and the ‘land-hoggers’ can get exactly what they deserve.

    What really makes me annoys me is prices are only down about 6% and everyone is acting as though the end of the world is near.
    Watching Question Time the other night they discussed this situation and said it was ” not forseeable”.
    Clearly anyone who REALLY thinks that needs their head tested.

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  • G_W_A_B

    Surely it will be bought at a knock down price though, these so called “measures” will never come to fruition and no investor in their right mind would buy all their land stock at current market still inflated values. Would the Banks not force the sale of the land at the price it would actually fetch however far below the market value should these builder breach their covenants?

    As for:

    “and the ‘land-hoggers’ can get exactly what they deserve.”

    Abso-f**kin-lutely, but this should go for the 4 major supermarkets in time with all their land banking too.

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  • mark wadsworth says:

    Re supermarkets and landbanking, yet another problem that Land Value Tax will sort out (if the sites are any good, hanging on to them will be just too expensive).

    I wish they’d explained that £3 bn write down in more detail, in isolation the figure is meaningless. Is that a 10% write down, or 50% or 75%?

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