John Doe Posted August 10, 2012 Report Share Posted August 10, 2012 And interesting and useful thoughts from Dr B on the overall trend and the builders as a bell-weather. Thank you. Yes I see BDEV and many of the builders are up at 2 and a half year highs. What can we tell from this TN? Edit to say I think it's a bit strange too, as everything else points to a fall over the coming months. Link to comment Share on other sites More sharing options...
Van Posted August 10, 2012 Report Share Posted August 10, 2012 With the full article here http://www.retiremen...rice-index.html Today sellers still think there houses are worth what they were marketing them for at the peak. Unfortunately, these prices are 40% above what they seem to be selling for. AKA The Delusion index. Nice blog, good stuff. Link to comment Share on other sites More sharing options...
Meralti Posted August 10, 2012 Report Share Posted August 10, 2012 Yes I see BDEV and many of the builders are up at 2 and a half year highs. What can we tell from this TN? Edit to say I think it's a bit strange too, as everything else points to a fall over the coming months. Perhaps the correlation has been weakened. Theres been so much interference in the housing market, what with lender forbearance and low interest rates, and stocks have been supported with QE just look what happened last autumn when there was almost a crash. They QEed and bingo back up they went. Link to comment Share on other sites More sharing options...
John Doe Posted August 10, 2012 Report Share Posted August 10, 2012 Perhaps the correlation has been weakened. Theres been so much interference in the housing market, what with lender forbearance and low interest rates, and stocks have been supported with QE just look what happened last autumn when there was almost a crash. They QEed and bingo back up they went. Yeah I think you're right. Also the gov seem intent on helping the housebuilders rather than the first time buyers (which they pretend they're trying to help). Link to comment Share on other sites More sharing options...
Van Posted August 11, 2012 Report Share Posted August 11, 2012 Perhaps the correlation has been weakened. Theres been so much interference in the housing market, what with lender forbearance and low interest rates, and stocks have been supported with QE just look what happened last autumn when there was almost a crash. They QEed and bingo back up they went. Didn't one of the big builders triple H1 profits and reinstate the dividend? The market is not collapsing, and in such an environment builders can find a way to make money. BDEV is probably a much better - but smaller - company than it was in 2006/2007. Disproves the inflationists' argument that you need ever rising prices to make profits. Link to comment Share on other sites More sharing options...
Meralti Posted August 11, 2012 Report Share Posted August 11, 2012 Didn't one of the big builders triple H1 profits and reinstate the dividend? The market is not collapsing, and in such an environment builders can find a way to make money. BDEV is probably a much better - but smaller - company than it was in 2006/2007. Disproves the inflationists' argument that you need ever rising prices to make profits. Builders are being tax-payer subsidized by schemes like home-buy. It's presented as helping people step onto the ladder but it's really about maintaining the builders cash flow. Link to comment Share on other sites More sharing options...
drbubb Posted August 12, 2012 Report Share Posted August 12, 2012 Signs of stress in BTL Financial Times: Buy-to-let repossessions at record high You will need to register with the FT to see this article. The FT has looked at data from the Council Of Mortgage Lenders and found that the proportion of repossessions that were for BTL properties rose from 10 percent in 2009 to 19 percent during the first half of 2012. I'm not sure what to make of this data. Are banks showing less forbearance to BTLers compared with residential households or is the BTL market rental income declining due to arrears? The total repossession rate for BTL (repossessions in total number of mortgages) is a record 0.24 percent hence the headline. http://www.ft.com/cms/s/0/fdaf1250-e2ed-11e1-a463-00144feab49a.html Link to comment Share on other sites More sharing options...
Meralti Posted August 12, 2012 Report Share Posted August 12, 2012 Stumbled on a couple of interesting tweets from Ed Conway. It looks like UK rental demand is falling of a cliff: https://twitter.com/EdConwaySky/status/233848222832021505/photo/1 Understatement from RICS: "tenant demand +4, a little down from +15 last time, but still indicative of positive growth" https://twitter.com/EdConwaySky/status/233844891300528130/photo/1 UK rental demand for flats has dropped to the lowest level since comparable records began in 2000 (RICS) The original Rics report is found here. As usual a overall bullish message not really born out by the data. Any one got anecdotal evidence of an increase of flats for sale in London and surrounding? Link to comment Share on other sites More sharing options...
drbubb Posted August 13, 2012 Report Share Posted August 13, 2012 House price balance shows biggest fall in a year - RICS Reuters UK - 25 minutes ago | LONDON (Reuters)- British house prices experienced their most widespread falls for a year in the three months to July, and surveyors do not expect the outlook to improve over the next 12 months, a survey by the Royal Institution of Chartered ... /See: http://uk.reuters.com/article/2012/08/13/uk-house-price-idUKBRE87C15520120813 (2) House prices hit new low, study finds UK house prices have dipped to their lowest levels for a year, according to the latest monthly survey of housing professionals, with transaction levels also slipping. The Royal Institution of Chartered Surveyors found that a balance of 24 per cent more reported prices falling rather than rising in July, from a balance of 22 per cent in June. Moreover, the number of transactions is also declining, with 20 per cent more reporting a decline in newly agreed sales than a rise, compared with a balance of 13 per cent reporting falling volumes in June. http://www.ft.com/cms/s/0/a8eb20b8-e560-11e1-9a2f-00144feab49a.html#ixzz23TMCyMI1 Link to comment Share on other sites More sharing options...
drbubb Posted August 14, 2012 Report Share Posted August 14, 2012 Where's the Sense in this ? The market is slowing down, so add to supply ?? FT: Coalition plans housebuilding stimulus Ministers are preparing to unveil a new package of measures to stimulate the flagging house-building sector next month, in an attempt to help drag Britain out of recession. The plan has been drawn up by Oliver Letwin, the prime minister’s head of policy, along with Grant Shapps, housing minister, and Danny Alexander, chief secretary to the Treasury. Since 2010, the coalition has introduced several plans to boost housebuilding, such as putting forward more public land for development. [i see lots of vague plans and absolutely no concrete action.] /see: Link to comment Share on other sites More sharing options...
drbubb Posted August 14, 2012 Report Share Posted August 14, 2012 Largest monthly drop in house prices for 4 years Monday, July 16, 2012 This month’s sellers cut asking prices by -1.7% (-£4,138) the largest price drop in July for four years, according to Rightmove's House Price Index. - Average Property Asking Price: £242,097 - % Change in Month: -1.7% - % Change in Past Year: +2.3% - Monthly Index (Jan 2002=100): 197.0 Overview New sellers outnumber successful buyers by an average of nearly 2:1, highlighting the substantial challenge faced by many sellers during this summer of miserable ‘viewing’ weather and Olympic distractions. Perhaps in response, those coming to market have dropped their initial price expectations by asking an average of £4,138 (-1.7%) less than sellers in the previous month, the first fall since January. While the onset of the quieter summer selling season often sees a softening of new sellers’ prices, this is the largest drop Rightmove has recorded in July since 2008. /see: http://www.myintroducer.com/view.asp?ID=10441 ==== ==== Whoops! That was Last Month August is usually the seasonal lowpoint, so just hang on Link to comment Share on other sites More sharing options...
drbubb Posted August 14, 2012 Report Share Posted August 14, 2012 MIXED SIGNALS / London may be holding so far House prices are falling and more drops are expected in the coming months, surveyors said today. A balance of 24% more surveyors reported falling rather than rising prices last month, the most negative reading since June 2011, the Royal Institution of Chartered Surveyors (RICS) said. London, which has had strong interest from overseas buyers, is the only region where more surveyors reported price rises than falls. The West and East Midlands and Yorkshire and Humberside were the areas where surveyors were the most likely to report prices falling. The start of the school holidays meant activity in the market tailed off further, with the number of new sellers coming to market declining for the third month in a row, while demand from buyers remained broadly flat despite the wet weather, the study said http://www.standard.co.uk/news/uk/london-house-prices-property-across-the-uk-is-falling-and-more-drops-expected-say-surveyors-8045760.html Link to comment Share on other sites More sharing options...
Meralti Posted August 14, 2012 Report Share Posted August 14, 2012 Where's the Sense in this ? The market is slowing down, so add to supply ?? [[i see lots of vague plans and absolutely no concrete action.] /see: Tinker around the edges; attempt to protect the margins for builders, keeping them afloat and people employed in construction. They help their friends in the industry and can present themselves as taking action to mitigate a crisis in the media. I.e. manage perceptions and help people who helped you. Link to comment Share on other sites More sharing options...
drbubb Posted August 14, 2012 Report Share Posted August 14, 2012 Tinker around the edges; attempt to protect the margins for builders, keeping them afloat and people employed in construction. They help their friends in the industry and can present themselves as taking action to mitigate a crisis in the media. I.e. manage perceptions and help people who helped you. It has worked so far. And nonsensical articles like this have helped / GIGO / Garbage-In, Garbage-Out / London house prices: Shortages mean price of homes will continue to go up in long term Home buyers are still likely to make decent returns on their investment in the longer term despite the weakness of the current market, a study has found. House price growth is projected to average 2% a year in real terms between 2012 and 2025, with a lack of available homes pushing up prices later in the decade once housing demand recovers from current subdued levels, PricewaterhouseCoopers (PwC) said. The rate would give a more modest return than the growth seen over the last 30 years, with increases of around 4% a year between 1984 and 2007. But it does offer homeowners some hope compared with the situation over the last five years, as real house prices have plummeted by around a fifth since 2007, leaving many people stuck in negative equity and unable to take their next step on the housing ladder. Lenders have also been tightening their borrowing criteria in recent months, making it tougher for people to take out a mortgage in the sluggish market. A landlord with a buy-to-let property could expect an average real return of 3% a year before tax but after running costs between 2012 and 2025, the study suggested. . . . The PwC study found that by comparison, a 50/50 mix of index-linked gilts and equities were likely to give a similar return to housing over the next 13 years, with an expected real return of around 3% a year. /more: http://www.standard.co.uk/news/uk/london-house-prices-shortages-mean-price-of-homes-will-continue-to-go-up-in-long-term-8030463.html How do they come up with this horsesh/t ? Personally, given the demographics, and current (high) prices levels, I think there is near zero chance for a 3% Annual Real return Link to comment Share on other sites More sharing options...
TrueNorth Posted August 14, 2012 Report Share Posted August 14, 2012 Where's the Sense in this ? The market is slowing down, so add to supply ?? FT: Coalition plans housebuilding stimulus Ministers are preparing to unveil a new package of measures to stimulate the flagging house-building sector next month, in an attempt to help drag Britain out of recession. The plan has been drawn up by Oliver Letwin, the prime minister’s head of policy, along with Grant Shapps, housing minister, and Danny Alexander, chief secretary to the Treasury. Since 2010, the coalition has introduced several plans to boost housebuilding, such as putting forward more public land for development. [i see lots of vague plans and absolutely no concrete action.] /see: One can only conclude that the housebuilding industry employs the most talented lobbyists. Link to comment Share on other sites More sharing options...
John Doe Posted August 14, 2012 Report Share Posted August 14, 2012 One can only conclude that the housebuilding industry employs the most talented lobbyists. After the bankers Link to comment Share on other sites More sharing options...
borassic Posted August 14, 2012 Report Share Posted August 14, 2012 The tragedy of the UK economy - all that credit being pumped in to non-productive asset that is housing. Still a no-brainer for a bank - low risk, high reward and a bailout when it goes wrong! Link to comment Share on other sites More sharing options...
John Doe Posted August 15, 2012 Report Share Posted August 15, 2012 The conundrum continues. UK unemployment down again. 8.2% to 8% http://www.bbc.co.uk/news/business-19259913 Link to comment Share on other sites More sharing options...
drbubb Posted August 17, 2012 Report Share Posted August 17, 2012 SOUND JUDGMENT or Misinformation? Ballymore’s 'Embassy Gardens' scheme would provide up to 1,982 new homes alongside shops, cafes, bars, restaurants, business space, a 100 bed hotel, a health centre, children’s playgrounds and sports pitches. It would also provide more than 6 acres of new outdoor public space including a section of the Nine Elms linear park which will run the full length of the district. The development site is located to the south of Nine Elms lane and wraps around the site of the new US Embassy. As part of the scheme’s Section 106 package Ballymore has agreed to pay between £52.5mn and £55.7mn towards improving local transport and social infrastructure. The exact figure will depend on the timing of the payments and final form of the development /see: http://www.e-architect.co.uk/london/embassy_gardens_nine_elms.htm The article in HK's Square Foot magazine is entitled: "Sound Judgement" ================ It talks about two Ballymore Group developments in the London area + Embassy Gardens (EG) - "in burgeoning Nine Elms district, across the river from Chelsea." + Providence Tower (PT) - a "prime London property", 10 minutes from Canary Wharf "95,000 professionals trek to Canary Wharf daily, and only 7,000 live locally." "There isn't enough residential, tehre isn't enough high end lifestyle and leisure development for the people who work in those industries." Comparing EG and PT - "Is Ballymore competing with itself" EG: "Is very much about capital appreciation. It's a huge regeneration story" "Will the yields be as fantastic as acheived at Canary Wharf? No, they won't. Yields are generated by rents versus prices and prices of Zone 1 flats are higher." link: http://www.ballymoregroup.com/en-GB/developments/nine-elms-battersea Mixed Use: •2,600,000 sq ft mixed use community of apartments, office space, retail and leisure, grocery store and flexible work and community space / •2,000 new homes /•Potential for up to 600,000 sq ft of office space PT: "You're going to get yields of 6 percent plus. Are you going to get the same growth potential? Probably not." PT is "for those who want an annual return on their investment." http://www.ballymoregroup.com/en-GB/developments/new-providence-wharf THIS ALL strikes me as misinformation somehow Link to comment Share on other sites More sharing options...
BlackPepper Posted August 18, 2012 Report Share Posted August 18, 2012 Pfft' the last horrah of the last easy credit orgy. Cannot imagine anyone with half of brain scrambling for some toxIc UK crap real estate? Link to comment Share on other sites More sharing options...
drbubb Posted August 19, 2012 Report Share Posted August 19, 2012 Pfft' the last horrah of the last easy credit orgy. Cannot imagine anyone with half of brain scrambling for some toxIc UK crap real estate? What set me off was the Detail in the descriptions: One property was said to HAVE A HIGH YIELD, and the other was said to have more capital gains potential The TRUTH, I Reckon is: ======= + Neither have much capital gains potential / both are poor investments + The one wih the high (expected) yield, has a huge management fee, and so if you calculate the Net Yield, it is far lower and unexciting + In both cases, the yields are estimates, and actual market yields will be lower Or maybe: "Ballymore has agreed to pay between £52.5mn and £55.7mn towards improving local transport" Ballymore does really pay that, the punters that buy the property pay it. Maybe that raises the price, and lowers the yield - and it may be tough to get people to pay the rent in a new area like that I am happy to be corrected on this, if someone has specific information on either London property This "UK crap real estate" is selling rather well in Hong Kong, and places like Singapore Link to comment Share on other sites More sharing options...
John Doe Posted August 20, 2012 Report Share Posted August 20, 2012 More builders doubling profits UK housebuilder Bovis Homes has reported a doubling of profit and has increased its dividend after selling more homes at a higher average price. Pre-tax profits for the six months to 30 June were £16.2m, up from £8.1m in the same period last year. http://www.bbc.co.uk/news/business-19315635# Now councils might sell expensive properties in good areas, to build more cheaper ones in not-so-nice areas. Selling top homes when they become vacant would raise £4.5bn a year, enough to build 80,000 to 170,000 new social homes, providing building jobs. http://www.bbc.co.uk/news/uk-politics-19311364 Link to comment Share on other sites More sharing options...
jrcardwell Posted August 20, 2012 Report Share Posted August 20, 2012 My friends building firm has just closed down and another has just resorted to door step leaflets. They usually do medium size work, but they are being outbid by the bigger firms who usually bid on large government/council projects ie bdev type firms. So maybe bdev is not such a good indicator DrB Link to comment Share on other sites More sharing options...
drbubb Posted August 20, 2012 Report Share Posted August 20, 2012 CAUTION FLAG hoisted for Bears More builders doubling profits UK housebuilder Bovis Homes has reported a doubling of profit and has increased its dividend Peak profits maybe? "My friends building firm has just closed down... So maybe bdev is not such a good indicator DrB" BDEV may not be a good predictor of the prosperity of your friends firm, but it has worked reasonable well for the UK and London property market BDEV-chart BDEV: 152.20 +3.20 Open: 149.30 / High: 152.60 / Low: 148.40 Volume: 4,457,104 Percent Change: +2.15% HIGH for the year : 153.15 (could be broken this week) At the moment, BDEV is threatening to breakout to the Upside, and so is not supporting my notion of a post-Olympics house price slide. Bears should be careful ! If volume stays above 3mn shares, and BDEV pushes above 153P, I will have to publish a post headlined: Crash postponed ? Link to comment Share on other sites More sharing options...
drbubb Posted August 21, 2012 Report Share Posted August 21, 2012 UK House Prices Plunge 2.4% in August as Olympics Restrains ... IBTimes.co.uk - 21 hours ago House prices suffered their worst monthly plunge ever in August, plummeting by 2.4 percent according to the Rightmove House Price Index. ==== Olympics 'leads to housing market lull' as prices in Wales drop 5.2% / WalesOnline Rightmove records highest August price drop on record Month-on-month asking prices dropped the highest ever from July to August, according to Rightmove. Its August House Price Index found that the average asking price in August 2012 was £236,260, down 2.4 per cent from £242,097 in July. That followed a 1.7 per cent drop month-on-month from June to July. Meanwhile, 127,992 properties were added to the market, up 0.4 per cent on August 2011. Despite the large drop in the last two months, prices are still 2 per cent higher than they were in August 2011. /see: http://www.mortgagefinancegazette.com/latest-news/rightmove-records-highest-august-price-drop-on-record/ That's a big back-to-back, wiping out all but 2% of the gain Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now