apologies yes he did say the economy, even though he posted on a Housebuilders site - I have heard over the years carpet sales being suggested as a predictor of what might happen to the housing market, but I would be interested to discover what proof there is that this relates to the economy?
CRN is my fave, not just of builders but of anything. They seem to be successfully running an 's-curve' (as are RED through a slightly different mechanism). We will know next Wed whether this remains on track, but at the IMS end ly all was well in hand. I shall be up prompt that day. HPI is not the only lever of the new build business.
Apropos the post from my fave little sunbeam & his Private Fraser impersonation (we're all doomed I tell you). Actually homewares are performing well, as are many companies downstream from housing (I own some of them) - CPT looks be company specific issues - & new build is clearly performing very very differently from the rest of the housing market. Homewares are currently the best performing part of consumer retail. Curious that! (But the little sunbeam has a perfect track record over the past decade of being wrong - quite a remarkable achievement). Miaow!
in the past they and others have been an early warning to whats ahead for the economy..the problem is if we go into recession with near zero rates,QE,fls and other props what can we do? and how can it be anything other than a nightmare?
Carpetright share price plummets 45% after it delivers second profit warning in just two months
Retailer's warning comes just weeks after first slashing profit target in December
Sales and footfall in the crucial post-Christmas period were 'significantly' down
Boss blames low consumer confidence for ailing firm's troubles
By Louise Hill For This Is Money
PUBLISHED: 08:49, 19 January 2018 | UPDATED: 08:58, 19 January 2018
Retailer Carpetright saw its share price plummet 45 per cent in early trading after poor performance since Christmas saw it slash profit expectations for the year.
The firm was forced to issue a profit warning after customer footfall and orders dropped off significantly during its crucial post-Christmas sales period.
It said trade following the festive period was significantly behind expectations with group sales down 2.3 per cent.
The price of a person´s house is neither here nor there, it is a highly illiquid asset because you have to live in a home. The reason the UK government wanting high house prices is because a lot of consumer debt has been transferred into `property (mortgages). Also a loan/book value banks face staggering write-downs should property prices fall. As I keep stating 2011-12 apart from the Nationwide, all UK BS were basically technically bust. You have 3 major manipulation points 1) Buy/let 2)Help to buy 3) % rates
Remember, when reviewing wealth, debt should firstly be countered in. "I cannot see something happen, you have black swan events. It´s what happens when a currency crisis develops & % rate have to increase. I wonder what would happen if the BoE was forced to increase % rates up to 3%-4%?
Most consumer debt is with mortgages & % rates fly, it´s going to have multiplier effects.
I don't see much sign of an imminent collapse in house prices. I agree with you that the effect of the various government interventions such as Help to Buy and cuts in stamp duty is that they contribute to inflating house prices and hardly at all in helping the young to buy their own house. The net effect has been to enrich CEOs and shareholders and those who own their own houses already.
I think that it would be a social good if government policy could effect house price deflation (cue screams of outrage from Baby Boomers everywhere). The best way of doing this would be to rebuild the national estate of social housing and to control rents.
Even if house prices fell by 30% it would still be a fantistically profitable industry.
So hpi closes 2017 @ +5% yoy (ONS). There's a surprise - not. In line with my posts during the year. Curious no further posts from the Chuckle Brothers about their predictions of hpi collapse. Interesting to see same source shows new build hpi running at almost +13% yoy. Probably mix, but someone somewhere is selling new houses at far higher prices, with the profits to boot .................
Sound set of no.s. As per the other bulk builders, moving towards a supply plateau. The plateau on pricing could also be a function of changes to mix or regionality, notably mothballing central London (Z1/Z2). As I previously said this will ultimately reboot pricing pressure. Where it gets really really interesting is on the cash & l/b purchase front. Now comprehensively ungeared as it was throughout hD17. Thats after paying a significantly increased dy & massive l/b purchases. At J17 BAR had total ca 9 years l/b. HD17 it bought land at almost double the utilisation rate. They were catagoric this was wholly above hurdle rate (gm 20%) you get the best bargains when no one else is buying & the other builders have gone on to a maintenance buy rate. For fy18 as a whole target buying is ca +20% over utilisation rate. So hJ18 BAR will become massively cash generative whilst further building the l/b to over a decades cover. They could either further accelerate the dy or cherry pick extra l/b (& I think there are plenty of good opportunities). At some point pricing pressure reaches bite point again & central London re-emerges from hibernation (which will really reboot hpi trends). At that point BAR will be locked & loaded. As I say all this without debt. So today I see base fair value (in a plateau market) at £8-50. This would drop the dy to only ca 5%, still well above the market. Ill stick around. Mr Mkt will disagree, but so what plus ca change etc as its been over the past decade.
I would have said reasonable but slightly clunky performance. UK marginally ahead of my expectations, but Spain a fair bit below. The fall in order book both by £ & units I take as another sign that market new build supply is going into a plateau (which ultimately re-engenders pricing pressure). A tad rich to claim this decline is due to accelerated build/sales in the current year when the current year performance is little more than flattish. Lots of inferences that the brand is unimpaired by the rents/leasehold misspelling. Overall a touch of the Bovis in the management style here. Maybe that's why Redfern's report on UK housing for the gov't seems to have been quietly shelved. I'll watch with considerable interest, but feel no desire to be an investor on this specific one.
Persimmon good steady as she goes figs. Clear signs of a coming plateau in units, asp, margin & I think forward orders. I suspect definitely running into capacity constraints (materials/labour). Hence moves on vertical integration (bricks/modular manufacture). But coupled with effectively nil supply in the secondary market = build up of pricing pressure. Their overgenerous (!) bonus scheme will be dilutive (ie overpaying the mgmt). Even so a ca 5% dy would make it a sound though boring hold. If BAR perform operationally similarly (which they should do & they dont have an excessive bonus scheme) then on the here & now they should be north of £7. BAR still have the best quality l/b of the bulk builders. CRN & RED still look to me the most attractive of all the quoted builders, as they're running 'S-curves' & which the major builders are not in a position to do.
Just running my y/e figs for 2017. So that's BAR sp up +42% yoy before dy. Gosh there must be a couple of Bitter & Twisteds (aka the Usual Suspects) out there.
As to 'when will the crash happen'? Well as everything the BTs/US have posted here for the past decade has been utterly wrong, I daresay the answer is not before 2030 or so. If one actually reads the no.s it's interesting to see that the UK housing supply/demand (demographic need) imbalance is now considerably worse than at the onset off the CC in 2007. Further supply/newbuild output looks to have run into the rather obvious capacity constraints (manpower/materials) at ca 200k units pa, which is way insufficient to alleviate a further build up of pricing pressure.
The secondary market is totally moribund & in fact transactions there are going backwards. Pre the CC the UK population moved once ca every 13 years which is now down to ca once every 24 years (& this ratio continues to rise - so basically if you buy a property age 25, then gov't policy is that's it until you're 50 - well life doesn't work that way! This indicates there's a massive build up of further latent pricing pressure/deferred transactions - not to mention dissatisfaction with the gov't (I suspect the main culprit on this is stamp duty).
I suspect the UK housing market will go sideways for a while in terms of both pricing & transactions. But at some point like a turbo charged pressure cooker, it will go into overdrive again, as it did in 09. I just don't know quite when. But there again I didn't know the date of the exact turn point post 07, but over the past decade that ignorance has proved to be irrelevant in context of my portfolio's performance! As ever we shall see.
Litecoin (LTC) has crashed 34% today to $206 and is down 43% from its peak two days ago, which was when its founder Charlie Lee announced that hed dumped his entire stake, possibly a very wise decision on his part. Market cap has shrunk to $11.4 billion.
Betting on cryptos is a peculiar form of online gambling on a global scale that requires a consensus among participants that they only buy, and that you cannot ever cash out, and now that some folks are trying to cash out, the bets for everyone else are souring. The same dynamics that pushed prices up have reversed and are causing them to crash.
Meantime on planet earth the UK new build data has emerged. Construction/sales are performing strongly. So someone somewhere is building a lot more homes & more to the point selling them. The sales performance looks locked in for another 12 months.
""""The chair of housebuilding firm Persimmon has resigned over his role in orchestrating a £100m-plus bonus for the companys chief executive, as critics accused the firm of benefiting from the taxpayer-backed help-to-buy scheme. The huge share award worth around £110m was attacked by politicians, charities and corporate governance experts, who described it as obscene, corporate looting and a reward based on taxpayer subsidies. Persimmon is one of the biggest beneficiaries of the governments help-to-buy programme, which has lifted sales and boosted house prices across the UK. - Observer""""
So I guess that's why the housebuilder sp's are going up then.
This morning's RICS data shows the house price supply-demand imbalance strengthening again (in the sense of continued marked reduction in supply/sales instructions) indicating after a lull moving towards increased pricing pressure (up) around Easter 18.
RICS doesn't really cover new build. Though they put an interesting footnote on their release stating the London data was really representative of Z1/Z2 & not outer London - ie stamp duty depressing high end housing transactions. But even there y'day Hamptons commented on a sharp return of foreign buyer.
Even with new build UK output remains below pre CC run rates & is easily -20% below the 06 peak. For the past decade we've run a 21st century society with a Victorian level of supply.
Good luck with the doomster gloomster posts, but I'll stick with economics 101 - the law of supply & demand - & I suspect you'll be financially going the way of your coevals on this bb.
""""Official UK figures showed house prices are falling more than expected and are predicted to worsen in coming months.
The official house price index fell by 0.5% month-to-month in October, the Office for National Statistics revealed on Tuesday.
House prices in September were also revised down by 0.6%."""
"""A person closely associated with The Berkeley Group's Sean Ellis cashed in on a large batch of shares of the luxury homebuilder at the start of the week.
According to the company, Karen Ellis let go off 65,000 shares at an individual price of 4,103p on 11 December, just as the stock was on its way to a fresh 52-week high, for a total transaction value of £2,666,884.96."""
I should have added these digital currencies look very reminiscent of the .com bubble. If a digital currency had the backing of platnium/silver/gold behind it then you would be looking at a very serious play.
Notice Jamie Dimon, predicted $20k back in January!
There are bubbles all over the place, now they are predicting $60k for Bitcoin. Although fiat money is probably just as intrinsically worth as much as Bitcoin (0), what can you buy with Bitcoin? It is so complicated to buy as well not discounting the fraud by many of these exchanges. From where I see it this is the biggest Ponzi scheme going with no paper trails, no accountability no nothing. A true currency cannot have such volatility. As Greenspan, points out Bitcoin has similarities to the first U.S. currency.
I just wonder how close we are to seeing the first public default? 80% of Newham´s council tax goes in the form of %. 40m write-off from an "investment" with the London Stadium. I am still holding on to my gold & silver!!
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