House builders took a pummelling today?

[BullDog]

Generally poor economic outlook hitting the building industry hard today or something more? The sector looks very vulnerable to bad news at the moment, it seems.

[Dod101]

Generally poor economic outlook hitting the building industry hard today or something more? The sector looks very vulnerable to bad news at the moment, it seems.

Yeah, they're shovelling up interest rates to create a recession to make us all unemployed. That'll solve our gas supply issues.

Hi Snorvey

Has something got into you or are you just reverting to type?

Dod

[BullDog]

Kindly take the unpleasantness elsewhere. I would prefer this thread to stay on topic please. Thank you.

[88V8]

Generally poor economic outlook hitting the building industry hard today or something more? The sector looks very vulnerable to bad news at the moment, it seems.

Surprising since Truss is rumoured to be so pro building things she will junk much of the protection for our countryside, and don't the housebuilders just love putting up their little brick breeding boxes in green fields.

Govts have been propping up the housing sector for years, pumping in finance, it would be nice if they stopped.
The BoE has to pay wider attention to inflation and anyone who has seen the effect of sustained high inflation over a period will say more power to their elbow.

V8

[MrFoolish]

To which I gave my truthful opinion on the matter. To drive down inflation, the BOE will cause a recession.

The recession is probably already here. Painful as they are, recessions are a fact of life - and they tend not to last long. Such downturns can also prompt a shake-out of inefficiencies which build up in companies. Obviously this can be painful if you were the wrong person in the wrong job at the wrong time. But perhaps that job was never tenable in the long-term.

Inflation, on the other hand, can cause devastating long-term damage if you don't deal with it.

Sometimes you have to swallow the bad tasting medicine.

[MrFoolish]

Surprising since Truss is rumoured to be so pro building things she will junk much of the protection for our countryside, and don't the housebuilders just love putting up their little brick breeding boxes in green fields.

Where is your evidence for this? The Tories usually give in to rural NIMBYism, so I find your suggestion highly unlikely. She certainly hasn't expressed any enthusiasm for on-shore wind turbines (something else the rural lobby don't like).

[Lanark]

Fed up with all the bullshit Dod. As if the royals weren't bad enough, I expect more to come this week with the 'Truss-enomics' mini budget and our sage like bunch of wankstains that make up the Bank of England making their considered decision to put up interest rates. Again

I don't think they have a choice, the pound has been taking a hammering, so they either follow the US rate rises or face runaway inflation. The pound touched its lowest level since the mid-1980s under $1.14 last week

It really is a fiction that anyone (political or the BOE) in the UK can just 'decide' what rates will be, the US decides and we along with a bunch of other smaller countries just have to follow along.
Also US voters are largely insulated from rate rises, because they all have 25 year fixed mortgages, so don't expect any sympathy from that corner.

If anything the UK has been asleep at the wheel in bring these rises in so slowly, it is going to happen, so better to take the medicine sooner.

[Jam1]

Not just the house builders but also the property investment companies down today, such as API, EBOX, BBOX, BLND. Large discounts to NAV for EBOX (36.1%) and API (37.5%) to name two - another thread exists on REIT NAV discounts. In regards, the current Government/Regulation, there are some environmental considerations that currently constrain development in some catchments, such as nutrient neutrality.

[Dod101]

Generally poor economic outlook hitting the building industry hard today or something more? The sector looks very vulnerable to bad news at the moment, it seems.

Not all housebuilders took a pummelling today. M J Gleeson was down less than 1%. Depends the market they are in I think but most housebuilders are cyclical and if not now when?

Dod

[Bouleversee]

Persimmon was my largest holding by far, mainly because it had gone up so much since I bought. Most of those gains have now disappeared but at least I have still had the benefit of the large dividends they have dished out. I think the drop is overdone unless they have huge production problems. There will be plenty of people who can afford to pay more than current prices and need to put a roof over their heads. Whether it will be my grandchildren is another matter. The shares I have given them over the years towards that purpose are all looking pretty sickly.

[Hypster]

Interestingly, a housebuilder was my best performer today. Springfield Properties (SPR) was up 3.6% having released its 2022 full year results today.

https://polaris.brighterir.com/public/s ... ry/x4npldr

[BullDog]

Thanks very much for the thoughts. Given the current economic outlook it's hardly surprising many builders share prices are suffering. Might even challenge the 2020 covid low prices.

Fundamentally we don't build anything like enough houses and haven't done for a few decades.

[Charlottesquare]

Persimmon was my largest holding by far, mainly because it had gone up so much since I bought. Most of those gains have now disappeared but at least I have still had the benefit of the large dividends they have dished out. I think the drop is overdone unless they have huge production problems. There will be plenty of people who can afford to pay more than current prices and need to put a roof over their heads. Whether it will be my grandchildren is another matter. The shares I have given them over the years towards that purpose are all looking pretty sickly.

They will likely have a shortage of customers as with rising interest rates and wobbly house prices banks will reduce mortgage multiples of salary they will lend. Coupled with soaring construction costs, as have already been experienced ,and housebuilders will likely be squeezed between dropping selling prices and increased costs, a position where 20% margins soon evaporate.

My purchase of Bellway in July is now adrift 25% and is looking very sickly, at least it was a very small punt and my overseas focused ITs have at least been resilient (and at least with those declaring dividends in dollars I will hopefully see some growth in income)

For those with UK focussed (via earnings) shares or ITs life is looking a tad unenviable.

[88V8]

Fundamentally we don't build anything like enough houses and haven't done for a few decades.

Imv we build far too many, but then I start from a viewpoint of wanting a large cut in our population....

However, it's not Planning... according to the Grauniad... lazy first search find.... there are plenty of permissions extant but not built https://www.theguardian.com/society/2021/may/08/over-1m-homes-in-england-with-planning-permission-not-built so presumably the housebuilders don't think house prices are high enough as yet.

I find it hard to understand why we still build houses as if it were 1922. Not the quality, obviously, but the method... on site, piece by piece. Surely factory builds should now be the norm. Perhaps the memory of pre-fabs lingers in aged BoD members, but surely long forgotten by most of the public.

V8

[Charlottesquare]

Fundamentally we don't build anything like enough houses and haven't done for a few decades.

Imv we build far too many, but then I start from a viewpoint of wanting a large cut in our population....

However, it's not Planning... according to the Grauniad... lazy first search find.... there are plenty of permissions extant but not built https://www.theguardian.com/society/2021/may/08/over-1m-homes-in-england-with-planning-permission-not-built so presumably the housebuilders don't think house prices are high enough as yet.

I find it hard to understand why we still build houses as if it were 1922. Not the quality, obviously, but the method... on site, piece by piece. Surely factory builds should now be the norm. Perhaps the memory of pre-fabs lingers in aged BoD members, but surely long forgotten by most of the public.

V8

Factory built are pretty common in rural areas these days, things like SIPS, but of course not so simple in urban areas where height is often required.

[vand]

They've been utter dogs, haven't they?

PSN down 56% from peak, BDEV down 53% from peak - takes a lot of dividends to make up for that!