Collapse of the UK housing market

[BullDog]

And the shares go up. I am never going to understand this stock market stuff. Obviously.

Check the book value of the company

AiY(D)

Can it be believed?

(Carillion?)

[AsleepInYorkshire]

Check the book value of the company

AiY(D)

Can it be believed?

(Carillion?)

I think the answer is yes. The book value is based on the value of the land they own. It's the only real asset house builders own. They can write this value down but aren't saying (yet) that the land has fallen in value. It depends what they've been paying for their land. But the BV is sitting at .79. The BV seems to anticipate they can write down their land by (is it) 20% and still be worth todays share price. I'm sure I'm talking very simplistically though. What we need is an accountant to come along and throw some deeper meaning on to it all

I think they're just repositioning for a rough year or two? I'd have to take a closer look at the RNS to see if there's anything more complicated in the release. You may recall I mentioned footfall before now. As the number of people visiting their sales areas reduces they will become aware of a drop in interest in their new homes. They will preserve cashflow by reducing overheads and work-in-progress, until sales office footfall begins to show a sustained sign of a market recovery and that trickles through to an increase in completions. They will also “consider the opportunity” to "encourage" their supply chains to start taking some of the pain . As costs in the industry overheated in the last couple of years they will now do the opposite and start to “supercool”.

AiY(D)

[squareofthewicket]

Bellway to cut volume by a third as firm axes around 150 staff

Housebuilder says it expects to build just 7,500 homes this year and has let go of around 5% of staff

Housebuilder Bellway has said it is expecting to cut build volume by a third and see a near halving of profit in its current financial year, given weak demand for new homes prompted by high interest rates.

The listed builder, reporting results for the full year to July, said it expected completions to drop to around 7,500 in the current year, from 10,945 in the year just gone, and for its profit margin to drop by at least six percentage points.

AiY(D)

A very naive question:

If all of the house builders reduce the numbers they build during a housing market downturn, why do governments (even one that is expected to form the next one) then promise / add to their manifestos that they would build x-thousands of units/houses per year? Does the government / local councils have builder(s) that they can dictate to, so that certain number of supposedly low cost housing units are built? They seemed to have failed on this every single year over the last 15 odd years.

TiA
squareofthewicket

[AsleepInYorkshire]

Bellway to cut volume by a third as firm axes around 150 staff

Housebuilder says it expects to build just 7,500 homes this year and has let go of around 5% of staff

Housebuilder Bellway has said it is expecting to cut build volume by a third and see a near halving of profit in its current financial year, given weak demand for new homes prompted by high interest rates.

The listed builder, reporting results for the full year to July, said it expected completions to drop to around 7,500 in the current year, from 10,945 in the year just gone, and for its profit margin to drop by at least six percentage points.

AiY(D)

A very naive question:

If all of the house builders reduce the numbers they build during a housing market downturn, why do governments (even one that is expected to form the next one) then promise / add to their manifestos that they would build x-thousands of units/houses per year? Does the government / local councils have builder(s) that they can dictate to, so that certain number of supposedly low cost housing units are built? They seemed to have failed on this every single year over the last 15 odd years.

TiA
squareofthewicket

I'm probably not the right person to answer this question as, quite simply, I've no [pigging] idea why any government/political party claims to be able to build a number of houses. The graph below shows the number of houses completed by year. I plugged the numbers into a spreadsheet from the ONS website. Private completions are the largest contribution to the number of units built. Housing associations and Local Authorities ultimately, in simple terms, get "some" of their funding from government. Don't ask me to go into that in detail as the last time I looked at it I think beer was still less than £1/pint


It's going to need someone with a little more knowledge than I have of why politicians lay claim to something that I've never witnessed any private housing company paying any heed to during my time sat in the commercial department. Those immortal words "The Labour/Conservative Party [delete one at your pleasure] have just won the election we'd better get building faster as they have promised 300K new homes per year in their manifesto" have never been used when I've been doing the monthly build release, cashflow and profit/loss statements.

I'm not going to even guess why they say it. I've never witnessed anything in the industry that would come close to any alignment with what politicians claim they are "going to build".

AiY(D)

[Lanark]

The only way that private companies are going to ramp up their building at a time when nobody is buying is if:

1) The govt dream up some scheme to dupe the public into buying them i.e. Help to Buy.
2) The govt just agree to buy them all and rent them out, which will no doubt involve paying peak prices in a falling market and handing huge wodges of taxpayer cash to a bunch of housing associations.

1) has already been tried, so my guess is it will be 2)

[Lootman]

a time when nobody is buying

Nobody? I have recently been thinking about dipping my toe in, 20 years after exiting the BTL market. Maybe do Airbnb this time. As a cash buyer, mortgage rates do not matter to me.

One of my sons is currently looking to buy a second property, purely for HMO rentals. He can get 3K a month in rent from 5 students or foreign workers in a house, both classes of renters are happy to share.

There are always buyers at the right price.

[Tara]

The only way that private companies are going to ramp up their building at a time when nobody is buying is if:

1) The govt dream up some scheme to dupe the public into buying them i.e. Help to Buy.
2) The govt just agree to buy them all and rent them out, which will no doubt involve paying peak prices in a falling market and handing huge wodges of taxpayer cash to a bunch of housing associations.

1) has already been tried, so my guess is it will be 2)

The Government, whether Conservative or Labour, have no intention of ever building the required number of houses. If they ever actually did that the whole UK housing Ponzi scheme would collapse along with UK house prices. That is the scam. Keep housing supply low, and keep housing demand high through mass immigration of illegal migrants.

The greedy landlords, including many MPs who are also greedy landlords, all benefit from the scam, and they are not really concerned if the country is destroyed by mass illegal immigration. The same thing is happening in Ireland now as greedy landlords benefit from the housing of thousands of illegal migrants. And all the rents are of course paid by the unfortunate UK and Irish taxpayers through billions of euros and pounds in housing benefit.

[Lanark]

The majority of migrants are 100% legal and the laws for that migration are setup by the govt.

The small percentage of illegal migrants who get deported are not enough to have a significant effect on the housing market, but I guess they make a convenient scapegoat.

One side effect of brexit has been harmonising the rules for immigration making it much easier for immigration from india, this was always part of the plan, import cheap indian labor and keep UK wages held down.

The constant banging on about "illegal" migration is a diversionary tactic to stop people putting 2 and 2 together.

[Tara]

Whether the migration is legal or illegal, the government still have no intention of ever building the required number of houses.

Keep housing supply low, and keep housing demand high through mass immigration of legal or illegal migrants. That is the scam to keep the UK housing Ponzi scheme going.

[Lootman]

Whether the migration is legal or illegal, the government still have no intention of ever building the required number of houses.

Why is it the job of the government to decide how much housing should be built? Surely the market can determine that?

[Mike4]

Whether the migration is legal or illegal, the government still have no intention of ever building the required number of houses.

Why is it the job of the government to decide how much housing should be built? Surely the market can determine that?

It can and it does.

When the price of housing goes down comfortably-off people simply buy and consume more of it, thereby supporting the prices.

My own hovel could easily accommodate 4 or 5 people if push came to shove. Or ten or more in extremis. Probably 20+ if the out-buildings were pressed into service.

[Lootman]

Why is it the job of the government to decide how much housing should be built? Surely the market can determine that?

It can and it does.

When the price of housing goes down comfortably-off people simply buy and consume more of it, thereby supporting the prices.

My own hovel could easily accommodate 4 or 5 people if push came to shove. Or ten or more in extremis. Probably 20+ if the out-buildings were pressed into service.

If there is a shortage of housing in the UK then that is not because the government has failed to intervene. It is because the government has intervened too much, through planning controls and other restrictions on the market.

[Mike4]

It can and it does.

When the price of housing goes down comfortably-off people simply buy and consume more of it, thereby supporting the prices.

My own hovel could easily accommodate 4 or 5 people if push came to shove. Or ten or more in extremis. Probably 20+ if the out-buildings were pressed into service.

If there is a shortage of housing in the UK then that is not because the government has failed to intervene. It is because the government has intervened too much, through planning controls and other restrictions on the market.

I meant the market determines it not the guvvermint, as per your final question.


(Edit to clarify.)

[CliffEdge]

There are too many houses where I live.

[AsleepInYorkshire]

Barratt sees ‘difficult’ housing market ahead amid higher mortgage costs

Housebuilder Barratt Developments has warned the property market will remain “difficult” as higher mortgage costs hit demand.

The group said it saw weekly reservations for new homes slump to 169 from 188 since its year-end on June 30.

It cautioned over an “uncertain” outlook, “with the availability and pricing of mortgages critical to the long-term health of the UK housing market”.

Barratt added it expect “the backdrop will continue to be difficult over the coming months”.

AiY(D)

[Nimrod103]

It can and it does.

When the price of housing goes down comfortably-off people simply buy and consume more of it, thereby supporting the prices.

My own hovel could easily accommodate 4 or 5 people if push came to shove. Or ten or more in extremis. Probably 20+ if the out-buildings were pressed into service.

If there is a shortage of housing in the UK then that is not because the government has failed to intervene. It is because the government has intervened too much, through planning controls and other restrictions on the market.

There is little evidence of a shortage of housing in the UK, because there are very few actually living on the street. What there is, is a vociferous group of people who think they should be able to buy a better, bigger house than they find they can currently afford. Many are imploring the Govt to step in and make houses cheaper by forcing building land to be sold at agricultural prices. They will not be happy until most of the southeast is one big urban sprawl.

[dealtn]

Whether the migration is legal or illegal, the government still have no intention of ever building the required number of houses.

Keep housing supply low, and keep housing demand high through mass immigration of legal or illegal migrants. That is the scam to keep the UK housing Ponzi scheme going.

Housing supply isn't low, and the market happily corrects if it were. There are sufficient places to live for all the people that are in the country.

[servodude]

Whether the migration is legal or illegal, the government still have no intention of ever building the required number of houses.

Keep housing supply low, and keep housing demand high through mass immigration of legal or illegal migrants. That is the scam to keep the UK housing Ponzi scheme going.

Housing supply isn't low, and the market happily corrects if it were. There are sufficient places to live for all the people that are in the country.

...as long as you don't get a choice?
As far as I'm aware you don't have enough places for prisoners let alone a functional housing market.
Can you possibly let us see your working?

[AsleepInYorkshire]

Whether the migration is legal or illegal, the government still have no intention of ever building the required number of houses.

Keep housing supply low, and keep housing demand high through mass immigration of legal or illegal migrants. That is the scam to keep the UK housing Ponzi scheme going.

Housing supply isn't low, and the market happily corrects if it were. There are sufficient places to live for all the people that are in the country.

I'm not entirely sure how it dovetails into the conversation but (iirc) the UK's housing stock isn't as fit for purpose as we need it to be in relation to insulation. New homes have a very high standard of insulation built into them. Older homes can only be upgraded in part. I have no idea if that ultimately means we need to slowly replace older homes. Probably a moot point?

I think the demand for new homes can possibly be captured in one word. Aspiration. Whilst there's an aspiration to own a new home there will be, subject to the vagaries of macro-economic events a demand.

That aside the claim that house builders manipulate the market is again something I haven't witnessed in 43 years in the industry. Trust me if the sales department are selling houses the rest of the business will come under pressure to deliver whatever is needed. It really is as simple as that.

And when the market is overheating, the clue for me has always been the number of days the bricklayers work - when they start leaving early on a Thursday afternoon, instead of a Friday it's a robust indicator that there's an adjustment that will be needed and it will be an increase in interest rates that brings this about. Again it's really as simple as that.

I think claims that house buiilders are part of a ponzi scheme or in anyway listen to governments or political parties promises is utter rubbish.

AiY(D)

[dealtn]

Housing supply isn't low, and the market happily corrects if it were. There are sufficient places to live for all the people that are in the country.

...as long as you don't get a choice?
As far as I'm aware you don't have enough places for prisoners let alone a functional housing market.
Can you possibly let us see your working?

Google "empty homes" and you will get plenty of information - mostly from pressure groups - but depending on definition there are between 250k and 1 million empty homes in the UK. Many of those could be brought back to provide rented accommodation if that was the focus of government, rather than a focus on new building (which they all say they will deliver but in practice it isn't the public sector that does this).

Even outside of these "empty" homes there are relatively few people living "on the streets". The issue for many people is as you say "choice". Many want to live somewhere else, in a bigger place, somewhere that costs less etc. Choices like that can't (and shouldn't?) be easy, like most things in life.