malj1
23 Apr 2019
Re: hpi So what happened to ly’s doomsters who predicted oh so knowingly hpi was about to collapse? Couldn’t be wrong could they? As they’ve been daily for the past decade! HPI looks set to reaccelerate in the next few months. Notably mid range housing & London. Builders look v gd value indeed.
malj1
18 Feb 2019
Re: meantime back on planet earth … which is also known as the UK housing market. Repossessions fall to 4580 for 2018, the lowest since 1980 (UK finance). Households in mortgage arrears (where unmade payments higher than 2.5% of the outstanding balance) down -5% yoy end 2018. The number of mortgage arrears represents ca 0.9% of the ca +9m mortgaged properties in the UK. The UK now has significantly more properties owned outright than owned via a mortgage, so clearly these owners have significant equity & are rather impervious to interest rate shifts. No sign of a debt bomb here. In fact quite the opposite. Nice try but no cigar. On you go to your next panic attack.
SaraRacano
06 Feb 2019
The Australian property debt bomb Talk about a double whammy! Property prices & the actual properties themselves are falling apart!
malj1
06 Feb 2019
Re: er, no actually What can I say. Yet another v strong performance. This despite peak brexit panic hysteria. Ungeared, consolidated special dy, stash of land, central London coming back sharply into the mix. What’s not to like? Yes I know the usual posts incoming about how we’re all doomed & how I just don’t get it from the usual ‘wrong every day for the past decade posters.’ On the assumption TM gets her brexit deal through, once this cloud passes BAR easily has the potential to double its sp. Even without a deal it looks pretty bomb proof, with a forward dy of ca 8.4% net. I can hear the usual screams & howls of rage already … We shall see - bring it on.
frog_in_a_tree
09 Jan 2019
Divis this week A positive update from TW has lifted the price by 6.7% this morning. Completions are up and there is little sign of contraction. All we need now is to put a stop to Brexit and the sp will rocket! Cheers, Frog in a tree
stocks
21 Dec 2018
The rise of the homeless in 5 years (FT) Whilst homeless goes up in the ENGLAND, it goes down in other countries. LONDON in particular sees homeless people from: ROMANIA/ IRELAND/ SCOTLAND Speaking from somebody whom talks to Homeless people. Just an observation as people forget to add this when looking at statisticsof Homelessness in England, they forget where the homeless people have come from and blame England and somehow ENGLAND is expected to provide when really, the Governments of their own countries should be and they are not, which is why people are leaving and going to England as they have a better chance. If you talk about GREAT BRITAIN then you can scale down the problem, however, there is s till a proportional decrese in surrunding EUROPEAN countries where those are migrant and either they are homed through carrying a CHILD or given housing under REFUGEE status. TY Thank you
malj1
21 Dec 2018
Re: 2018 hpi So 2018 closes out. Hpi (ONS) comes in at ca 3% all housing (decelerating), within which new build comes in at ca 10% (accelerating). Collapse where exactly? Given the lowest stock supply in the secondary market since the '50s the only game in town if you want to buy a house is new build. Someone somewhere is making a ton of money in new build. Yet again the builders will be releasing stonking accounts in the new year & will be rolling in cash, with the majors all having well over £1bn on the b/s.
sueneave9
18 Dec 2018
The rise of the homeless in 5 years (FT) Shocking report.
Gamesinvestor1
13 Dec 2018
Growth What you might be forgetting m, is the impact on profits when land values get revalued on the downside. This tends to happen at a disproportionate level compared to the actual house price fall. You will have seen this in 2008, when the house prices fell in value, as they are starting to do now, then eventually the builders are forced to declare write downs on the value of the landbanks. This goes back to the point I was making about growth - unless the growth in volumes and the margins are maintained, the impact on profits is disproportionate in impact. HTB has allowed new build to recover from the lows in 2008-09 but only after HTB was introduced, and is responsible for some 40% of the volumes for most of the main house builders - this acts as a prop and has fuelled disproportionate profits (Persimmon being one of the worst examples of largesse, and a red flag in government). Take Redrow as an example - in 2007 it built 4728 houses at an ASP of £160K In 2017 it built less at 4305 but the ASP was 356K – as you can see this is completely unsustainable - and the % of the sales that were reliant on the asset price boost from HTB was as follows :- 2013 - the year HTB was introduced - 3.3% 2014 - when the scheme had ramped up - 34.53% 2015 - 39.81% 2016 - 40.37% 2017 - 39.88% I would expect this number to start to reduce as the effect of HTB is less now that asset prices have reached a very high point and even with HTB the affordability ratios have fallen away. I guess you are 100% convinced that the scheme will take prices to the moon and maintain the profitability of these companies ad-infinitum. I don’t see it that way – after the 2008 fall out the number of homes built by Redrow was more than halved at 1702 in 2009 and the ASP had dropped to £154K It’s coming - and the P/E isn’t representing the reality, as the E is going to be a very different number. Games – be careful, genuinly I mean that – you might have another opportunity to buy into the builders at a fraction of the current rates perhaps?
malj1
12 Dec 2018
Growth Your view on cost structure is incorrect. A fair rule of thumb for builders right now is a/ aggregate land costs 45%, b/ materials & labour 35%, margin (currently) 20%. Ultimately margin reduces when the post CC acquired l/b is fully passed through (cf eg BKG). But with a decade+ in the l/b for those with a spread outside London, this has a way to run. All the prime builders are now ungeared (not the case at the onset of the CC). The main players are each sitting on ca £1bn non utilised cash - a quasi insurance policy. In the event sales (units) slow they a/ stop buying materials, b/ lay off labour (especially contractors) & above all c/ stop buying land. In which case profits fall, but they become even more wildly cash generative. As market supply falls (as it is clear it will do in 2019) the supply demand imbalance becomes even greater ultimately forcing an even greater hpi upward reaction.
Gamesinvestor1
12 Dec 2018
Growth The housbuilders fortunes are very linked to growth and that has slowed radically in the last couple of years. In 2014 - BDEV grew earnings by 115% on a respectable revenue growth from 2013. In 2015 - earnings grew 46% on revenue growth of 19% In 2016 - earnings grew 21% on revenue growth of 12% In 2017 - earnings grew 11% on revenue growth of 9% In 2018 - earnings grew 8% on revenue growth of 4% Projected for June 2019 :- In 2019 - earnings to grow 2% on revenue growth of less than 1% These are only projections - it’s more than likely that earnings will miss in June 2019 as the slow down gathers pace and revenue dips. In the high growth period the company has a sensible dividend policy down at a few % – now it’s up at 9.8% and management should act to reduce this as their vulnerability to a declining market growth takes effect. Of BDEV’s 2018 revenue of £4,875M - over £4BN of that was operating expense - a large % of that fixed. Whilst BDEV has a good cash balance it will be drained quickly should sales fall by a few %. This is reflected in the share price falling consistently this year - it doesn’t help that the market is weak of course. The P/E of the company is a red herring in that it’s, yes down at 7 but as you see earnings falling then the E element changes the reality of that ratio. Games - It’s a gamble or an opportunity depending on how long the HTB scenario envelope is pushed and the costs of construction are capped. Affordability is stretched by any measure or ratio you want to dream up or put your faith in.
Gamesinvestor1
12 Dec 2018
Where have I seen this before? 13% of Kier groups profit is attributable to residential housing. Of the separate property division (separate from the residential division), which constitutes a massive 48% of it’s group profit, 46% of that profit comes from student accomodation and mixed use developments (mixed use also includes homes). Kier is very much a house/homes builder as well as a key construction company. Games
malj1
12 Dec 2018
Where have I seen this before? Actually no, Kier t/o is £4.5bn of which £4.1bn comes from construction/services. The housing arm is in explicit run off (the l/b has only 1 years cover). The op% is 3.5%. This is not a house builder.
Gamesinvestor1
12 Dec 2018
Where have I seen this before? malji - you shouldn’t be investing m8 with statements like that. Kier group have consistently acquired house builders over the years and are now responsible for building over 4000 homes. The house I live in was built by Bellwinch, which was acquired by the Kier Group. [link] Games
malj1
12 Dec 2018
Where have I seen this before? Kier is irrelevant. It’s a generic construction/service co, not a house builder. On average house prices you’re implicitly making a standard key mistake in applying ‘the average.’ Without being flip the answer revolves around which average you use, or to put it another way the composition of the average (mean) which you are using. The housing market is not a Normal Distribution standard bell curve. It is skewed - there is a long tail of high value transactions. Thus the 3 potential prime averages from the transaction data spread are significantly different - mean (ca £220k), median (ca £165k) & mode (ca £125k). Modal (most frequent) transactions look quite affordable (with indeed 95% LTV rates yet again falling) & I reckon will run for a considerable time yet - in this sense the housing market does not look stretched. What is playing out on the sp’s is sentiment, not operational reality. The time to acquire bargains is when there’s blood on the carpet. Faites vos Jeux …
