Watch the builders

house123

Someone who is far more cleaver then me, once told me if you want to know what’s going to happen to house prices watch the builders.

http://uk.news.yahoo.com/22/20090702/tuk-uk-britain-construction-pmi-fa6b408.html

In addition, the home builder’s shares, Taylor Wimpy etc, have not greatly increased in value over the last few months of positive house price data. It is probably all rubbish and house prices will go up regardless, but has anyone else got any thoughts?

halight

I dont think we will see any more high drops or high incresse for a good few years. Prices will now stagnate for a good while maybe as much as ten years.

Degenerate

house123 wrote: »

Someone who is far more cleaver then me, once told me if you want to know what’s going to happen to house prices watch the builders.

http://uk.news.yahoo.com/22/20090702/tuk-uk-britain-construction-pmi-fa6b408.html

In addition, the home builder’s shares, Taylor Wimpy etc, have not greatly increased in value over the last few months of positive house price data. It is probably all rubbish and house prices will go up regardless, but has anyone else got any thoughts?

It takes a fair while for house price drops and increased costs to feed through to profit or loss on builders' balance sheets - We're probably still seeing the effect of last year. With profits turning to losses, builders have little cash of their own to finance new projects, and teetering firms aren't likely to attract finance in the current environment.

Now think again, if less houses are being built, what effect would you expect that to have on prices?

Really2

house123 wrote: »

In addition, the home builder’s shares, Taylor Wimpy etc, have not greatly increased in value over the last few months of positive house price data. It is probably all rubbish and house prices will go up regardless, but has anyone else got any thoughts?

If you saw what they went down to (TW went down to 4p) you would think we are boom now:) but they are way off peak values. In reality shares prices for those companies will be around a 3 months behind what is actually happened unless some information is released before quarterly results.

But even then they could be in boom but have a bad balance sheet. Share price is more of a reflection of the company and not the market as a whole.

house123

Degenerate wrote: »

It takes a fair while for house price drops and increased costs to feed through to profit or loss on builders' balance sheets - We're probably still seeing the effect of last year. With profits turning to losses, builders have little cash of their own to finance new projects, and teetering firms aren't likely to attract finance in the current environment.

Now think again, if less houses are being built, what effect would you expect that to have on prices?

I always thought that stock markets were about what’s happening now and what’s likely to happen in the future, not what’s already happened.

I see your point about price, because of lack of supply. However, I think everyone would agree that the builders are not just going to sit on their hands and watch the market grow. They would be busting a gut to seek investment to build right now, to feed the demand. Therefore, if the building sector is not growing and indeed sitting on its hands, then they must believe that the current small upturn is unsustainable. Anyone agree?

Yakubu22

My Dad works in the Construction Industry. His company sells supplies to major builders and developers. Half of his staff have been laid off and he doesn't see how the company (which is a multinational) will last the next 6 months -barring a amazing recovery. He has been in the business since leaving school at 16 and he is in his 50s now. He swears he has never seen it this bad and his competitors, suppliers and customers are all going under -one by one.
In his own words "No-one is building"...so if what you say is true about watching builders then I think the worst is yet to come

Really2

Yakubu22 wrote: »

My Dad works in the Construction Industry. His company sells supplies to major builders and developers. Half of his staff have been laid off and he doesn't see how the company (which is a multinational) will last the next 6 months -barring a amazing recovery. He has been in the business since leaving school at 16 and he is in his 50s now. He swears he has never seen it this bad and his competitors, suppliers and customers are all going under -one by one.
In his own words "No-one is building"...so if what you say is true about watching builders then I think the worst is yet to come

I can say that no one was building 6 months ago.

Builders are now building to order, I have seen 6 houses go up in the last 3 months.

house123

Yakubu22 wrote: »

My Dad works in the Construction Industry. His company sells supplies to major builders and developers. Half of his staff have been laid off and he doesn't see how the company (which is a multinational) will last the next 6 months -barring a amazing recovery. He has been in the business since leaving school at 16 and he is in his 50s now. He swears he has never seen it this bad and his competitors, suppliers and customers are all going under -one by one.
In his own words "No-one is building"...so if what you say is true about watching builders then I think the worst is yet to come

My father in law works for one of the big house builders and he says something very similar. Surely this would not be the case if the builders have forecasted a recovery in the housing market and construction in general.

Cleaver

house123 wrote: »

Someone who is far more cleaver then me, once told me if you want to know what’s going to happen to house prices watch the builders.

I'm more cleaver than you.

house123

Cleaver wrote: »

I'm more cleaver than you.

Well, Its all in the name.

Graham_Devon

There were 56 people laid off this month, according to my dad who used to work for a company here. He only knows as one of his work partners there was one of them. Just no work apparently, so they have tried to put as many into after sales as possible, but you can only have so many people sorting out defects.

Most of the laying off was done in January however, over 200 then, however, what doesnt get reported is all the self employed they use, who are not getting contracted in. All their painters, brick layers etc were self employed and paid on a per brick / per house basis.

Those people, are simply not in the stats.